<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


[X]      Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
         Act of 1934



For the quarterly period ended    SEPTEMBER 30, 1998
                              -------------------------

                                       or

[ ]      Transition Report Pursuant to Section 13 of the Securities Exchange Act
         of 1934


           For the transition period from ____________ to_____________

                         Commission file number 0-17254


                           NOVEN PHARMACEUTICALS, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                STATE OF DELAWARE                            59-2767632    
         -------------------------------               ---------------------
         (State or other jurisdiction of                 (I.R.S. Employer
         incorporation or organization)                Identification Number)


         11960 S.W. 144TH STREET, MIAMI, FL                    33186        
      ----------------------------------------         ---------------------
      (Address of principal executive offices)              (Zip Code)


        Registrant's telephone number, including area code (305) 253-5099
                                                           ----------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.

                  CLASS                      OUTSTANDING AT OCTOBER 23, 1998
                  -----                   -------------------------------------
      Common stock $.0001 par value                    21,482,423



                                     Page 1

<PAGE>   2



                           NOVEN PHARMACEUTICALS, INC.

                               INDEX TO FORM 10-Q



<TABLE>
<CAPTION>
                                                                                                         PAGE NO.
                                                                                                         --------


<S>                                                                                                     <C>     
PART I - FINANCIAL INFORMATION
------------------------------

   Item 1 - Financial Statements

              Statements of Operations and Accumulated Deficit
                        for the three months ended September 30, 1998 and 1997                                3


              Statements of Operations and Accumulated Deficit
                        for the nine months ended September 30, 1998 and 1997                                 4


              Balance Sheets as of September 30, 1998 and
                        December 31, 1997                                                                     5


              Statements of Cash Flows for the nine months ended
                        September 30, 1998 and 1997                                                           6


              Notes to Financial Statements                                                                 7 - 9


   Item 2 -   Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                                                     9 - 13


PART II  - OTHER INFORMATION
----------------------------


   Item 6 -  Exhibits and Reports on Form 8-K                                                                13



SIGNATURES                                                                                                   14
----------




</TABLE>





                                     Page 2
<PAGE>   3


                          PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


                           NOVEN PHARMACEUTICALS, INC.

                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                   -------------------------------
                                                   SEPTEMBER 30,       SEPTEMBER 30,
                                                       1998                1997
                                                   ------------       ------------
<S>                                                <C>                <C>         
REVENUES:
  Product sales                                    $  3,962,229       $  4,042,314
  License revenue                                     1,056,499          1,677,499
  Interest income                                        86,753            256,547
                                                   ------------       ------------
                                                      5,105,481          5,976,360

                 Total revenues

EXPENSES:
  Cost of products sold                               1,575,947          1,834,616
  Research and development                            1,351,403          2,036,274
  Marketing, general and administrative               2,038,288          2,109,581
                                                   ------------       ------------

                 Total expenses                       4,965,638          5,980,471
                                                   ------------       ------------

NET INCOME (LOSS) FOR THE PERIOD                        139,843             (4,111)


ACCUMULATED DEFICIT BEGINNING OF PERIOD             (38,437,673)       (28,836,058)
                                                   ------------       ------------


ACCUMULATED DEFICIT END OF PERIOD                  $(38,297,830)      $(28,840,169)
                                                   ============       ============


BASIC AND DILUTED INCOME (LOSS) PER SHARE          $       0.01       $      (0.00)
                                                   ============       ============


WEIGHTED AVERAGE SHARES OF COMMON STOCK
     AND COMMON STOCK EQUIVALENTS                    21,474,561         20,352,928
                                                   ============       ============


</TABLE>


The accompanying notes are an integral part of this statement.



                                     Page 3

<PAGE>   4

                           NOVEN PHARMACEUTICALS, INC.

                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT


<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED
                                                   -------------------------------
                                                   SEPTEMBER 30,       SEPTEMBER 30,
                                                       1998                1997
                                                   ------------       ------------
<S>                                                <C>                <C>         
REVENUES:
  Product sales                                    $ 12,789,176       $  9,307,544
  License revenue                                     1,171,997          1,815,497
  Interest income                                       362,743            666,982
  Other income                                               --             31,325
                                                   ------------       ------------
                                                     14,323,916         11,821,348

               Total revenues

EXPENSES:
  Cost of products sold                               5,803,428          4,009,432
  Research and development                            5,333,411          6,185,317
  Marketing, general and administrative               7,881,090          6,419,453
                                                   ------------       ------------

                Total expenses                       19,017,929         16,614,202
                                                   ------------       ------------

NET LOSS FOR THE PERIOD                              (4,694,013)        (4,792,854)


ACCUMULATED DEFICIT BEGINNING OF PERIOD             (33,603,817)       (24,047,315)
                                                   ------------       ------------


ACCUMULATED DEFICIT END OF PERIOD                  $(38,297,830)      $(28,840,169)
                                                   ============       ============


BASIC AND DILUTED LOSS PER SHARE                   $      (0.23)      $      (0.24)
                                                   ============       ============


WEIGHTED AVERAGE SHARES OF COMMON STOCK
     AND COMMON STOCK EQUIVALENTS                    20,855,419         20,066,563
                                                   ============       ============


</TABLE>


The accompanying notes are an integral part of this statement.


                                     Page 4

<PAGE>   5




                           NOVEN PHARMACEUTICALS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         SEPTEMBER 30,      DECEMBER 31,
                                                                                              1998              1997
                                                                                         ------------       ------------
                                                                                          (Unaudited)
<S>                                                                                      <C>                <C>         
                                     ASSETS

CURRENT ASSETS:
      Cash and cash equivalents                                                          $  6,267,976       $ 11,267,555
      Securities held to maturity                                                                  --          5,880,430
      Accounts receivable                                                                   3,828,753          1,224,492
      Inventories                                                                           3,121,137          2,500,660
      Prepaid and other current assets                                                        230,667            282,472
                                                                                         ------------       ------------
                                                                                           13,448,533         21,155,609
            Total current assets

PROPERTY AND EQUIPMENT, at cost,
      net of accumulated depreciation and amortization of
      $4,652,711 at September 30, 1998 and $3,746,846 at
      December 31, 1997                                                                    15,028,379         15,243,267

OTHER ASSETS:
      Investment in Vivelle Ventures                                                        7,500,000                 --
      Patent development costs, net                                                         1,786,290          1,761,122
      Other assets                                                                            454,439             64,053
                                                                                         ------------       ------------
            Total other assets                                                              9,740,729          1,825,175
                                                                                         ------------       ------------

TOTAL                                                                                    $ 38,217,641       $ 38,224,051
                                                                                         ============       ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable                                                                  $  3,776,574       $  2,163,177
       Accrued liabilities                                                                  1,030,401            309,798
                                                                                         ------------       ------------
             Total current liabilities                                                      4,806,975          2,472,975

DEFERRED LICENSE REVENUE                                                                    5,700,522          5,870,019

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
      Preferred stock - authorized 100,000 shares of $.01 par value;
          no shares issued or outstanding
      Common stock - authorized 40,000,000 shares, par value $.0001 per share;
          issued and outstanding - 21,482,423 shares at September 30, 1998 and
          20,475,531 shares at December 31, 1997                                                2,148              2,048
Additional paid-in capital                                                                 66,669,061         64,146,061
Accumulated deficit                                                                       (38,297,830)       (33,603,817)
Treasury stock, 97,100 shares at cost                                                        (663,235)          (663,235)
                                                                                         ------------       ------------
             Total stockholders' equity                                                    27,710,144         29,881,057
                                                                                         ------------       ------------

TOTAL                                                                                    $ 38,217,641       $ 38,224,051
                                                                                         ============       ============


</TABLE>


The accompanying notes are an integral part of this statement.


                                     Page 5

<PAGE>   6

                           NOVEN PHARMACEUTICALS, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        NINE MONTHS ENDED
                                                               -------------------------------
                                                                SEPTEMBER 30,      SEPTEMBER 30,
                                                                    1998               1997
                                                               ------------       ------------
<S>                                                              <C>                <C>          

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                     $ (4,694,013)      $ (4,792,854)
    Adjustments to reconcile net loss to net cash
       used in operating activities:
           Depreciation and amortization                            1,061,493            827,053
           (Increase) decrease in accounts receivable              (2,604,261)           356,158
           (Increase) decrease in inventories                        (620,477)           577,789
           Decrease in prepaid and other current assets                51,805            141,873
           Increase (decrease) in accounts payable                  1,613,397           (646,817)
           Increase in accrued liabilities                            720,603            405,915
           Decrease in deferred license revenue                      (169,497)          (169,497)
                                                                 ------------       ------------

                  Cash flows used in operating activities          (4,640,950)        (3,300,380)


CASH FLOWS FROM INVESTING ACTIVITIES:
          Investment in Vivelle Ventures                           (7,500,000)                --
          Maturity of securities                                    5,880,430          7,885,747
          Purchase of fixed assets, net                              (690,977)          (433,065)
          Payments for patent development costs                      (180,796)          (248,701)
          (Payment) refund of other assets                           (390,386)             1,059
                                                                 ------------       ------------
                 Cash flows (used in) provided by investing
                       activities                                  (2,881,729)        (7,205,040)


CASH FLOWS FROM FINANCING ACTIVITIES:
          Sale of common stock                                      2,523,100          4,023,850
                                                                 ------------       ------------



NET (DECREASE) INCREASE IN CASH AND CASH
         EQUIVALENTS                                               (4,999,579)         7,928,510


CASH AND CASH EQUIVALENTS - BEGINNING OF
         PERIOD                                                    11,267,555          5,456,826
                                                                 ------------       ------------


CASH AND CASH EQUIVALENTS - END OF PERIOD                        $  6,267,976       $ 13,385,336
                                                                 ============       ============


</TABLE>

The accompanying notes are an integral part of this statement.


                                     Page 6

<PAGE>   7

                         NOTES TO FINANCIAL STATEMENTS


1.     BASIS OF PRESENTATION

       The financial statements of Noven Pharmaceuticals, Inc. (the "Company"),
       included herein, do not include all footnote disclosures normally
       included in annual financial statements and, therefore, should be read in
       conjunction with the Company's financial statements and notes thereto for
       each of the three years in the period ended December 31, 1997 included in
       the Company's annual report on Form 10-K.

       The interim financial statements for the nine months ended September 30,
       1998 are unaudited and, in the opinion of management, reflect all
       adjustments (consisting only of normal recurring accruals) necessary for
       fair presentation of the balance sheets, statements of operations and
       cash flows of the Company. The statement of operations for the periods
       ended September 30, 1998 is not necessarily indicative of the results to
       be expected for the year ending December 31, 1998.


2.     SUMMARY OF ACCOUNTING POLICIES

       The following is a summary of the significant accounting policies
       consistently applied in the preparation of the Company's financial
       statements:

       INVENTORIES - Inventories are stated at the lower of cost (first-in,
       first-out method) or net realizable value. Inventories at September 30,
       1998 are related primarily to the Company's transdermal and transoral
       delivery systems. To date the Company has not experienced and does not
       anticipate in the future, any difficulty acquiring materials necessary to
       manufacture its transdermal and transoral systems. The following are the
       major classes of inventory:

                                    September 30,   December 31,
                                       1998            1997
                                   --------------   ------------

               Finished goods        $1,363,343      $  857,219
               Work in process          440,897         335,650
               Raw materials          1,316,897       1,307,791
                                     ----------      ----------

               Total                 $3,121,137      $2,500,660
                                     ==========      ==========


       PROPERTY AND EQUIPMENT - Property and equipment is recorded at cost.
       Depreciation is provided over the estimated useful lives of the assets.
       Leasehold improvements are amortized over the life of the lease or the
       service life of the improvements, whichever is shorter. The straight-line
       method of depreciation is primarily followed for financial purposes.

       PATENT DEVELOPMENT COST - Costs, principally legal fees related to the
       development of patents, are capitalized and amortized over the lesser of
       their estimated economic useful lives or their remaining legal lives.




                                     Page 7
<PAGE>   8




                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


       LOSS PER SHARE - The Company adopted SFAS No. 128, EARNINGS PER SHARE,
       for fiscal year 1997. Under SFAS No. 128, basic loss per share excludes
       dilution and is computed based on the average number of common shares
       outstanding and diluted loss per share is computed based on the average
       number of common and common equivalent shares outstanding. Under the
       treasury stock method, common equivalent shares are not included in the
       per share calculations where the effect of their inclusion would be
       antidilutive. SFAS No. 128 required the restatement of all prior-period
       earnings per share data. For purposes of the financial statements herein
       net loss per share represents basic and diluted loss per share.

       NEW ACCOUNTING STANDARDS - In June 1997, the FASB issued Statement of
       Financial Accounting Standards No. 131, "Disclosures about Segments of an
       Enterprise and Related Information", ("SFAS No. 131"). SFAS No. 131
       establishes standards for the way that public companies report selected
       information about operating segments in annual financial statements and
       requires that those companies report selected information about segments
       in interim financial reports issued to shareholders. It also establishes
       standards for related disclosures about products and services, geographic
       areas, and major customers. SFAS No. 131 is effective for financial
       statements for the periods beginning after December 15, 1997. The Company
       does not believe that SFAS No. 131 will have an impact on its disclosures
       to the financial statements.

       RECLASSIFICATION - Certain amounts in the 1997 financial statements have
       been reclassified to conform with the 1998 presentation.


3.     STOCKHOLDERS' EQUITY

       A schedule of the transactions in common stock, additional paid-in
       capital and treasury stock accounts is as follows:

<TABLE>
<CAPTION>
                                                     COMMON STOCK                ADDITIONAL
                                               ----------------------------        PAID-IN         TREASURY
                                                 SHARES           AMOUNT           CAPITAL           STOCK            TOTAL
                                               -----------      -----------      -----------      -----------       -----------
<S>                                             <C>             <C>              <C>              <C>               <C>        
BALANCE, JANUARY 1, 1998                        20,475,531      $     2,048      $64,146,061      $  (663,235)      $63,484,874

    Issuance of 40,708 shares of stock
       pursuant to stock option plan, net           40,708                4           23,095               --            23,099

    Issuance of 966,184 shares of stock
       pursuant to exercise of warrant             966,184               96        2,499,905               --         2,500,001
                                               -----------      -----------      -----------      -----------       -----------

    BALANCE, SEPTEMBER 30, 1998                 21,482,423      $     2,148      $66,669,061      $  (663,235)      $66,007,974
                                                ==========      ===========      ===========      ===========       ===========


</TABLE>



                                     Page 8

<PAGE>   9




                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


4.     INVESTMENT IN JOINT VENTURE

       The Company and Novartis Pharmaceuticals Corporation ("Novartis") entered
       into a joint venture, Vivelle Ventures LLC, ("Ventures") effective May 1,
       1998, to market and sell women's healthcare products, including
       Vivelle(R). The Company contributed $7.5 million in return for a 49%
       equity interest. Novartis contributed its rights to Vivelle in the United
       States under existing license and supply agreements with Noven and also
       licensed the right to use the Vivelle trademark for a 51% equity
       interest. The Company accounts for its investment in Ventures under the
       equity method. The associated legal and investment banking fees have been
       capitalized in other assets and will be amortized over 10 years. The
       Company shares in the income of Ventures according to an established
       formula after an annual preferred return of $6.1 million to Novartis. As
       this preferred return has not yet been obtained, no income has been
       recognized by the Company from the operations of Ventures as of September
       30, 1998. All material intercompany profits have been eliminated.


     ITEM 2.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

       GENERAL

       From inception (1987) through 1994, the Company primarily engaged in the
       research and development of transdermal drug delivery systems. During
       this period, the Company's revenues were principally generated by license
       fees, milestone payments pursuant to various license agreements and
       interest earned on funds raised through the sale of its common stock. In
       1995, due to the receipt of regulatory approvals for its transdermal
       estrogen delivery system, a significant portion of the Company's revenues
       were derived from the sale of this product to the Company's two licensing
       partners, Novartis and Rhone-Poulenc Rorer ("RPR"). In 1996, revenues
       from the sale of these products increased substantially as the Company's
       licensing partners purchased product to supply their distribution
       channels and build their own inventory positions.

       Although in-market sales on Noven's estrogen delivery systems continued
       to increase on a global basis, Noven experienced lower product sales
       during 1997 as compared to 1996 as the inventory levels of its licensee
       partners and distribution channels diminished without resupply. Sales of
       its transdermal estrogen delivery systems have increased in 1998; the
       launch of its transdermal estrogen/progestin delivery systems by RPR in
       the United States and abroad has also contributed to increased revenues.
       However, a loss is expected for full-year 1998 due to the fact that
       product sales still will not be sufficient to offset operating costs,
       which will include significant research and development expenditures.

       During 1996, the Company commenced the marketing of its DentiPatch(R)
       system on a regional basis. The product was launched nationally in the
       second quarter of 1997, with the first national advertising program
       commencing at the beginning of the fourth quarter of 1997. Revenues from
       this product are anticipated to increase during 1998.

       During May 1998, Noven entered into a joint venture with Novartis for the
       commercialization of women's healthcare products, and in particular,
       Vivelle(R). Noven will continue to manufacture Vivelle(R) for Ventures
       for a fixed price and will continue to receive royalty payments on sales
       of Vivelle(R).


                                     Page 9
<PAGE>   10

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

       RESULTS OF OPERATIONS

       Total revenues decreased approximately $871,000 or 15% for the three
       month period ended September 30, 1998 from the same period in the prior
       year and increased approximately $2,503,000 or 21% for the comparable
       nine month period. The decrease in revenues for the third quarter was
       primarily due to a decrease in license revenue of $621,000. The license
       revenues in 1997 were related to the regulatory filings for the
       combination estrogen/progestin delivery system and in 1998 were the
       result of the approval of the filing in the United States. The increase
       in revenues for the 1998 nine month period was a result of the increase
       in product sales of the Company's estrogen delivery system, its
       DentiPatch(R) system and the launch by RPR of the combination
       estrogen/progestin delivery system. Royalties from the estrogen delivery
       system are included in product sales. Interest income decreased
       approximately $170,000 or 66% for the three month period ended September
       30, 1998 from the same period in the prior year and decreased
       approximately $304,000 or 46% for the comparable nine month period,
       primarily due to lower balances in securities.

       Cost of product sold decreased approximately $259,000 or 14% for the
       three month period ended September 30, 1998 from the same period in the
       prior year and increased approximately $1,794,000 or 45% for the
       comparable nine month period. The gross margin percentage was 60% for the
       third quarter of 1998 as compared to 55% for the same period of the prior
       year and 55% for the nine months of 1998 as compared to 57% for the
       comparable period in 1997. The gross margins vary depending on the
       product mix and manufacturing efficiencies including those relating to
       production volumes.

       Research and development costs decreased approximately $685,000 or 34%
       for the three month period ended September 30, 1998 from the same period
       in the prior year and decreased approximately $852,000 or 14% for the
       comparable nine month period. New product development included work
       related to transdermal delivery systems for hormone replacement, central
       nervous system, cardiovascular drugs, nonsteroidal anti-inflammatory
       agents and transoral delivery systems for dental therapeutics. Marketing,
       general and administrative expenses decreased approximately $71,000 or 3%
       for the three month period ended September 30, 1998 from the same period
       in the prior year and increased approximately $1,454,000 or 23% for the
       comparable nine month period. The increase in marketing, general and
       administrative expenses is primarily due to increases in staffing and
       associated office expenses.


       LIQUIDITY AND CAPITAL RESOURCES

       Net cash used in operating activities for the nine months ended September
       30, 1998 was approximately $4,641,000. This funded the net loss of
       approximately $4,694,000, increases in accounts receivable of
       approximately $2,604,000 and increases in inventories of approximately
       $620,000; partially offset by increases in accounts payable of
       approximately $1,613,000 and in accrued liabilities of approximately
       $721,000. For the same period in 1997, net cash used was approximately
       $3,300,000 to fund the net operating loss of approximately $4,793,000,
       decreases in accounts receivable, inventories and accounts payable and an
       increase in accrued liabilities.




                                    Page 10

<PAGE>   11


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

       During the nine months ended September 30, 1998 the Company's investing
       activities used approximately $2,882,000 compared to approximately
       $7,205,000 provided in the same period in the prior year. In 1998
       approximately $7,900,000 was used for the investment in Ventures and
       other assets, approximately $691,000 was used for capital expenditures
       for manufacturing equipment and approximately $181,000 for patent
       development, offset by the maturity of securities of approximately
       $5,880,000. In 1997, net cash provided was from the maturity of
       securities offset by capital expenditures and investment in patents. As
       of September 30, 1998, the Company had commitments for capital
       expenditures of approximately $683,000.

       Net cash of approximately $2,523,000 provided by financing activities for
       the nine months ended September 30, 1998 resulted primarily from the
       exercise of a common stock warrant by Novartis for 966,184 shares of
       Noven Common Stock. In 1997, net cash of approximately $4,024,000
       resulted principally from RPR's purchase of 500,000 shares of common
       stock for $4,000,000 pursuant to the partial exercise of its warrant. The
       balance of the cash provided by financing activities in 1998 and 1997 was
       due to the exercise of options under the employee stock option plan.

       As a result of its $7.5 million investment in Ventures in the second
       quarter of 1998 and the Company's operating loss during the first nine
       months of 1998, the Company's cash balances have been reduced to
       approximately $6.3 million. Additional costs are expected to be incurred
       related to product development activities, increased marketing, general
       and administrative expenses and the continued expansion of the
       facilities. However, due to increases in revenues derived in the second
       half of 1998, and certain expense reductions and expense reimbursement
       from Ventures, the Company believes that existing cash, anticipated
       contract and manufacturing revenues will provide sufficient liquidity for
       the next twelve month period. However, the Company may still seek to
       secure institutional financing for short term liquidity needs. Also, if
       market conditions become favorable, the Company may consider some form of
       equity financing. It is also likely that the Company will seek to raise
       capital for the longer term to support continued research and product
       development. The time and extent of these future capital raising
       activities will depend, to a great degree, upon the Company's
       performance, including the performance of Ventures, as well as general
       market conditions.

       YEAR 2000

       The Year 2000 issue is caused by computer software and databases which
       process years as two digits only, e.g. 1998 stored as "98." The year 2000
       would be stored as "00" creating inaccurate outcomes and system failures
       which could result in interruptions to business operations. Noven started
       a comprehensive program to address this issue in early 1998. The program
       includes all of the internal systems and equipment, as well as the entire
       supply chain, including customers, distributors, suppliers, and key
       business partners.

       To date, all internal systems and equipment have been inventoried and
       assessed. The systems have been tested and remediation, where necessary,
       is well underway. The inventory and assessments of the supply chain are
       completed and each entity's Year 2000 compliance program is being
       investigated.

       The Company will continue to monitor this program closely. The Company
       does not expect that Year 2000 expenditures will have a material affect
       on its business, financial condition or results of operations.


                                    Page 11

<PAGE>   12


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

       FORWARD LOOKING STATEMENTS 

        From time to time, Noven may publish forward looking statements relating
        to such matters as anticipated financial performance, business
        prospects, technological developments, new products, usage and
        development activities and some other matters. The words "may", "will",
        "expect", "anticipate", "continue", "estimate", "project", "intend" and
        similar expressions are intended to identify such forward looking
        statements. The Private Securities Litigation Reform Act of 1995
        provides a safe harbor for forward-looking statements. In order to
        comply with the terms of the safe harbor, Noven notes that a variety of
        factors could cause its actual results and experience to differ
        materially from anticipated results and other expectations expressed by
        Noven's forward looking statements. The risks and uncertainties that may
        affect the operations, performance, development and results of Noven's
        business, include the following:

                  1. The ability of Ventures to market and sell Vivelle(R) and
        to operate profitably.

                  2. Dependence upon RPR, its licensing partner, with respect to
        the marketing of MENOREST, and the commercialization of Estalis(TM) and
        CombiPatch(TM) (i.e. combination estrogen/progestin transdermal delivery
        systems).

                  3. Uncertainties regarding the market share for Noven's
        transdermal hormonal products, which can be captured by RPR and
        Ventures.

                  4. Uncertainties affecting Noven's ability to secure
        additional capital including general market conditions.

                  5. Competition from other entities engaged in transdermal
        and/or transoral research, development, manufacturing and marketing, as
        well as other entities engaged in alternative drug delivery
        technologies.

                  6. Difficulties associated with (i) identifying appropriate
        licensing partners capable of meeting the financial requirements of
        research and development and/or marketing new products, and (ii)
        consummating satisfactory licensing agreements.

                  7. The time required to obtain regulatory approval of products
        and its associated expenses.

                  8. Unanticipated difficulties associated with the
        manufacturing process of MENOREST and Vivelle(R), Estalis(TM) and
        CombiPatch(TM) that could result in delays in delivery and shortages of
        product.

                  9. The possible exposure to product liability suits in excess
        of insurance policy limits or excluded from insurance coverage.




                                    Page 12

<PAGE>   13




                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)



        Readers are cautioned not to place undue reliance on forward-looking
        statements when made, which speak only as of the date made. Noven
        undertakes no obligation to publicly release the results of any revision
        of these forward-looking statements to reflect events or circumstances
        after the date they are made or to reflect the occurrence of
        unanticipated events. Also, unless expressly stated, Noven does not
        adopt projections, forecasts or other forward-looking statements, which
        may be disseminated from time to time by analysts and others.



                           PART II - OTHER INFORMATION



        ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
 
 
                 Exhibit 27.......... Financial Data Schedule (for SEC use only)
















                                    Page 13

<PAGE>   14







                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
        Registrant has duly caused this report to be signed on its behalf by the
        undersigned thereunto duly authorized.


                                         NOVEN PHARMACEUTICALS, INC.
                                                 (Registrant)



        Date: NOVEMBER 6, 1998        By: /s/ Robert C. Strauss
              -----------------           ---------------------------------
                                          Robert C. Strauss
                                          President and Chief Executive Officer


                                      By: /s/ William A. Pecora
                                          ---------------------------------
                                          William A. Pecora
                                          Vice President, Finance and
                                          Chief Financial Officer











                                    Page 14