##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2006
 Commission file number 0-17254
 NOVEN PHARMACEUTICALS, INC.
  STATE OF DELAWARE
    
    59-2767632(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 (Address of principal executive offices) (Zip Code)
 (Registrants telephone number, including area code)
 þ o
  o þ o
 o þ
  Class
    
    Outstanding at April 28, 2006Common stock $.0001 par value
    
    23,680,001




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##### 



NOVEN PHARMACEUTICALS, INC.
  Page No.PART I  FINANCIAL INFORMATIONItem 1
 Unaudited Condensed Financial StatementsCondensed Statements of Operations for the Three Months Ended
March 31, 2006 and 2005
    
    
    3Condensed Balance Sheets as of March 31, 2006 and December 31, 2005
    
    
    4Condensed Statements of Cash Flows for the Three Months Ended
March 31, 2006 and 2005
    
    
    5Notes to Unaudited Condensed Financial Statements
    
    
    6Item 2
 Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17Item 3
 Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4  Controls and Procedures
    
    
    34PART II  OTHER INFORMATIONItem 1  Legal Proceedings
    
    
    36Item 1A  Risk Factors
    
    
    36Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37Item 6  Exhibits
    
    
    37SIGNATURES
    
    
    38Stock Appreciation Rights AgreementSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO
   ®  ® ® ® 
 2




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##### Table of Contents



Item 1.
Financial Statements
 NOVEN PHARMACEUTICALS, INC.
 
 
 Three Months2006
    
    
    2005Revenues:Product revenues  Novogyne:Product sales
    
    $
    3,087
    
    
    $
    4,978Royalties
    
    
    1,689
    
    
    
    1,114Total product revenues  Novogyne
    
    
    4,776
    
    
    
    6,092Product revenues  third parties
    
    
    3,871
    
    
    
    4,038Total product revenues
    
    
    8,647
    
    
    
    10,130Contract and license revenues:Contract
    
    
    664
    
    
    
    595License
    
    
    881
    
    
    
    1,011Contract and license revenues
    
    
    1,545
    
    
    
    1,606Net revenues
    
    
    10,192
    
    
    
    11,736Expenses:Cost of products sold  Novogyne
    
    
    2,143
    
    
    
    3,249Cost of products sold  third parties
    
    
    3,997
    
    
    
    2,625Total cost of products sold
    
    
    6,140
    
    
    
    5,874Research and development
    
    
    3,482
    
    
    
    2,893Marketing, general and administrative
    
    
    4,738
    
    
    
    4,055Total expenses
    
    
    14,360
    
    
    
    12,822Loss from operations
    
    
    (4,168
    )
    
    
    (1,086
    )Equity in earnings of Novogyne
    
    
    4,327
    
    
    
    912Interest income, net
    
    
    611
    
    
    
    503Income before income taxes
    
    
    770
    
    
    
    329Provision for income taxes
    
    
    266
    
    
    
    118Net income
    
    $
    504
    
    
    $
    211Basic earnings per share
    
    $
    0.02
    
    
    $
    0.01Diluted earnings per share
    
    $
    0.02
    
    
    $
    0.01Weighted average number of common shares
outstanding:Basic
    
    
    23,657
    
    
    
    23,509Diluted
    
    
    23,774
    
    
    
    23,966
 The accompanying notes are an integral part of these statements.
 3




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NOVEN PHARMACEUTICALS, INC.
 
 
 March 31, 2006
    
    December 31, 2005AssetsCurrent Assets:Cash and cash equivalents
    
    $
    31,418
    
    
    $
    66,964Short-term investments available-for-sale, at fair value
    
    
    50,925
    
    
    
    17,900Accounts receivable  trade (less allowance for doubtful
accounts of $45 in 2006 and $53 in 2005)
    
    
    4,100
    
    
    
    2,919Accounts receivable  Novogyne, net
    
    
    5,424
    
    
    
    8,912Inventories
    
    
    10,398
    
    
    
    7,861Net deferred income tax asset, current portion
    
    
    5,200
    
    
    
    6,000Prepaid income taxes
    
    
    7,562
    
    
    
    7,697Prepaid and other current assets
    
    
    2,014
    
    
    
    1,357117,041
    
    
    
    119,610Property, plant and equipment, net
    
    
    35,968
    
    
    
    34,455Other Assets:Investment in Novogyne
    
    
    20,252
    
    
    
    23,243Net deferred income tax asset
    
    
    7,182
    
    
    
    6,373Patent development costs, net
    
    
    2,271
    
    
    
    2,211Deposits and other assets
    
    
    222
    
    
    
    1829,927
    
    
    
    31,845$
    182,936
    
    
    $
    185,910Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable and accrued expenses
    
    $
    4,402
    
    
    $
    5,812Capital lease obligation  current portion
    
    
    91
    
    
    
    121Accrued liability  Shire
    
    
    5,488
    
    
    
    5,488Accrued compensation and related liabilities
    
    
    2,457
    
    
    
    5,771Other accrued liabilities
    
    
    2,312
    
    
    
    2,124Deferred rent credit
    
    
    89
    
    
    
    89Deferred contract revenues
    
    
    1,250
    
    
    
    1,481Deferred license revenues  current portion
    
    
    4,276
    
    
    
    7,60220,365
    
    
    
    28,488Long-Term Liabilities:Deferred rent credit
    
    
    726
    
    
    
    748Deferred license revenues
    
    
    19,559
    
    
    
    16,053Deferred compensation liability
    
    
    31
    
    
    
    40,681
    
    
    
    45,289Commitments and Contingencies (Note 12):Stockholders Equity:Preferred stock  authorized 100,000 shares of $.01 par
value; no shares issued or outstanding
    
    
    
    
    
    
    Common stock  authorized 80,000,000 shares,
par value $.0001 per share; issued and
outstanding 23,678,111 at March 31, 2006 and 23,617,221 at December 31, 2005
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    90,976
    
    
    
    89,846Retained earnings
    
    
    51,277
    
    
    
    50,773142,255
    
    
    
    140,621$
    182,936
    
    
    $
    185,910
 The accompanying notes are an integral part of these statements.
 4




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NOVEN PHARMACEUTICALS, INC.
 
 
 2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    504
    
    
    $
    211Adjustments to reconcile net income to net cash flows
provided by operating activities:Depreciation and amortization
    
    
    916
    
    
    
    581Stock-based compensation expense
    
    
    549
    
    
    
    Amortization of patent costs
    
    
    122
    
    
    
    108Increase in cash surrender value of company owned life insurance
    
    
    (4
    )
    
    
    Amortization of deferred rent credit
    
    
    (22
    )
    
    
    (8
    )Income tax benefits on exercise of stock options
    
    
    137
    
    
    
    77Deferred income tax benefit
    
    
    (9
    )
    
    
    (12
    )Recognition of deferred license revenues
    
    
    (881
    )
    
    
    (1,011
    )Equity in earnings of Novogyne
    
    
    (4,327
    )
    
    
    (912
    )Distributions from Novogyne
    
    
    7,318
    
    
    
    7,444Changes in operating assets and liabilities:(Increase) decrease in accounts receivable  trade, net
    
    
    (1,181
    )
    
    
    2,740Decrease in accounts receivable  Novogyne, net
    
    
    3,488
    
    
    
    3,295Increase in inventories
    
    
    (2,537
    )
    
    
    (2,361
    )Decrease (increase) in prepaid income taxes
    
    
    135
    
    
    
    (25
    )Increase in prepaid and other current assets
    
    
    (657
    )
    
    
    (692
    )Increase in deposits and other assets
    
    
    (15
    )
    
    
    Decrease in accounts payable
    
    
    (1,410
    )
    
    
    (4,898
    )Increase in accrued liability  Shire
    
    
    
    
    
    
    4,362Decrease in accrued compensation and related liabilities
    
    
    (3,314
    )
    
    
    (2,514
    )Increase (decrease) in other accrued liabilities
    
    
    188
    
    
    
    (150
    )Decrease in deferred contract revenue, net
    
    
    (231
    )
    
    
    (45
    )Increase in deferred license revenue
    
    
    1,000
    
    
    
    Increase in deferred compensation liability
    
    
    31
    
    
    
    Amounts recoverable from (reimburseable to) Shire and offset against
deferred license revenue related to Daytrana approval
    
    
    61
    
    
    
    (4,680
    )Cash flows (used in) provided by operating activities
    
    
    (139
    )
    
    
    1,510Cash flows from investing activities:Purchases of property, plant and equipment, net
    
    
    (2,429
    )
    
    
    (1,825
    )Payments for patent development costs, net
    
    
    (182
    )
    
    
    (156
    )Purchase of company owned life insurance
    
    
    (185
    )
    
    
    Purchases of short-term investments
    
    
    (285,375
    )
    
    
    (95,100
    )Proceeds from sale of short-term investments
    
    
    252,350
    
    
    
    65,150Cash flows used in investing activities
    
    
    (35,821
    )
    
    
    (31,931
    )Cash flows from financing activities:Issuance of common stock from exercise of stock options
    
    
    444
    
    
    
    816Payments under capital leases
    
    
    (30
    )
    
    
    (38
    )Cash flows provided by financing activities
    
    
    414
    
    
    
    778Net decrease in cash and cash equivalents
    
    
    (35,546
    )
    
    
    (29,643
    )Cash and cash equivalents, beginning of period
    
    
    66,964
    
    
    
    93,958Cash and cash equivalents, end of period
    
    $
    31,418
    
    
    $
    64,315
 The accompanying notes are an integral part of these statements.
 5




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NOVEN PHARMACEUTICALS, INC.
 
 Notes to Unaudited Condensed Financial Statements
 1.
    
    DESCRIPTION OF BUSINESS:
  ®  ®
 2.
    
    BASIS OF PRESENTATION:
   VENDOR DISCOUNTS:
  6




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3.
    
    CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:
  4.
    
    RECLASSIFICATIONS:
  5.
    
    CASH FLOW INFORMATION:
  Non-cash Investing Activities
  6.
    
    INVENTORIES:
  March 31, 2006
    
    
    December 31, 2005Commercial
    
    
    Pre-launch
    
    
    Total
    
    
    Commercial
    
    
    Pre-launch
    
    
    TotalFinished goods
    
    $
    1,121
    
    
    $
    
    
    
    $
    1,121
    
    
    $
    760
    
    
    $
    
    
    
    $
    760Work in progress
    
    
    1,219
    
    
    
    2,685
    
    
    
    3,904
    
    
    
    1,278
    
    
    
    1,004
    
    
    
    2,282Raw materials
    
    
    2,479
    
    
    
    2,894
    
    
    
    5,373
    
    
    
    3,422
    
    
    
    1,397
    
    
    
    4,819$
    4,819
    
    
    $
    5,579
    
    
    $
    10,398
    
    
    $
    5,460
    
    
    $
    2,401
    
    
    $
    7,861
 7




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
 7.
    
    EMPLOYEE STOCK PLANS:
      8




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2006
    
    2005Volatility
    
    
    52.2
    %
    
    
    69.0
    %Risk free interest rate
    
    
    4.94
    %
    
    
    3.49
    %Expected life (years)
    
    
    5
    
    
    
    5
   9




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WeightedWeighted
    
    
    
    
    
    
    AverageAverage
    
    
    Aggregate
    
    
    RemainingOptions/
    
    
    Exercise
    
    
    Intrinsic
    
    
    ContractualSSARs
    
    
    Price
    
    
    Value
    
    
    TermOutstanding at
beginning of the period
    
    
    4,004
    
    
    $
    17.23Granted
    
    
    11
    
    
    
    17.34Exercised
    
    
    (61
    )
    
    
    7.30
    
    
    $
    525Canceled and expired
    
    
    (9
    )
    
    
    23.74Outstanding at end
of the period
    
    
    3,945
    
    
    $
    17.37
    
    
    $
    12,989
    
    
    
    4.3Outstanding and exercisable
at end of period
    
    
    2,805
    
    
    $
    19.38
    
    
    $
    6,619
    
    
    
    3.9
    Net income:As reported
    
    $
    211Total stock-based employee
compensation expense determined
under fair value based method for all
awards, net of related tax effects
    
    
    (1,747
    )Pro forma
    
    $
    (1,536
    )Basic earnings per share:As reported
    
    $
    0.01Pro forma
    
    $
    (0.07
    )Diluted earnings per share:As reported
    
    $
    0.01Pro forma
    
    $
    (0.07
    )
 10




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##### Table of Contents



8.
    
    DEFERRED COMPENSATION PLAN:
   9.
    
    CONTRACT AND LICENSE AGREEMENTS:
 Shire
 
  
 11




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##### Table of Contents



10.
    
    INVESTMENT IN VIVELLE VENTURES LLC (d/b/a NOVOGYNE):
   Three Months2006
    
    
    2005Revenues:Product sales
    
    $
    3,087
    
    
    $
    4,978Royalties
    
    
    1,689
    
    
    
    1,114$
    4,776
    
    
    $
    6,092Reimbursed expenses
    
    $
    7,269
    
    
    $
    7,242
   Three Months2006
    
    
    2005Gross revenues
    
    $
    37,269
    
    
    $
    27,334Sales allowances
    
    
    3,793
    
    
    
    3,395Sales return allowances
    
    
    1,896
    
    
    
    1,266Sales allowances and returns
    
    
    5,689
    
    
    
    4,661Net revenues
    
    
    31,580
    
    
    
    22,673Cost of sales1
    
    
    7,521
    
    
    
    6,100Selling, general and
administrative expenses
    
    
    9,157
    
    
    
    8,670Income from operations
    
    
    14,902
    
    
    
    7,903Interest income
    
    
    152
    
    
    
    93Net income
    
    $
    15,054
    
    
    $
    7,996Novens equity in earnings of Novogyne
    
    $
    4,327
    
    
    $
    912
 
 1
    
    Included in Novogynes costs of sales is the amortization of the
marketing rights Novogyne acquired for CombiPatch®, which in prior periods was listed
as a separate operating expense in Novogynes statement of operations. 12




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Investment in Novogyne, beginning of period
    
    $
    23,243Equity in earnings of Novogyne
    
    
    4,327Cash distributions from Novogyne
    
    
    (7,318
    )Investment in Novogyne, end of period
    
    $
    20,252
  11.
    
    SHARE REPURCHASE PROGRAM:
 
 12.
    
    COMMITMENTS AND CONTINGENCIES:
 HT Studies
   ® ® ® ®
 13




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##### Table of Contents



®
 Production Issues
  ®     
 ® ® ®
 ® ® ® ® ® ®
 ® ® 
 14




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##### Table of Contents



® ®
  Supply Agreement
 ® 
 Litigation, Claims and Assessments
 ®
 ®
  ® ®
 15




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16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  
    
    An executive summary of our results of operations for the quarter ended March 31,
2006;
    
    An overview of Noven and our Novogyne joint venture;
    
    A review of certain items that may affect the historical or future comparability of our
results of operations;
    
    An analysis of our results of operations and our liquidity and capital resources;
    
    An outlook that includes our current financial guidance;
    
    A discussion of how we apply our critical accounting estimates; and
    
    A discussion of recently-issued accounting standards.
  Executive Summary
 The following Executive Summary is qualified in its entirety by the more detailed discussion
and analysis of our financial condition and results of operations appearing in this Item 2 as well
as Novens financial statements and the related notes included in this Form 10-Q .
  
    
 
 17




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
 
 Overview of Noven and Our Novogyne Joint Venture
 ®  ®
 ®  ® ® ®
 ®  ® ®  ®
  18




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®   ®
 ® ® ®
 Certain Items that May Affect Historical or Future Comparability
  Stock-Based Compensation
   19




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Shire
 
  
 20




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##### Table of Contents



Production Issues
  ® ® ® ® ®
 ® ®
  21




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##### Table of Contents



Results of Operations
 Three months ended March 31, 2006 compared to the three months ended March 31, 2005
 Revenues
  Three Months2006
    
    
    2005
    
    
    % ChangeProduct revenues  Novogyne:Product sales
    
    $
    3,087
    
    
    $
    4,978
    
    
    
    (38
    %)Royalties
    
    
    1,689
    
    
    
    1,114
    
    
    
    52
    %4,776
    
    
    
    6,092
    
    
    
    (22
    %)Product revenues  third parties:Product sales
    
    
    3,800
    
    
    
    3,965
    
    
    
    (4
    %)Royalties
    
    
    71
    
    
    
    73
    
    
    
    (3
    %)3,871
    
    
    
    4,038
    
    
    
    (4
    %)Total product revenues
    
    
    8,647
    
    
    
    10,130
    
    
    
    (15
    %)Contract and license revenues:Contract
    
    
    664
    
    
    
    595
    
    
    
    12
    %License
    
    
    881
    
    
    
    1,011
    
    
    
    (13
    %)1,545
    
    
    
    1,606
    
    
    
    (4
    %)Net revenues
    
    $
    10,192
    
    
    $
    11,736
    
    
    
    (13
    %)
 Net Revenues
 
 Product Revenues  Novogyne
  ® ® ®  ®
  ® ®  ®
 22




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®
 Product Revenues  Third Parties
 ® ® ® ®
 ® ® ®
 Contract and License Revenues
  Gross Margin
  23




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##### Table of Contents



Three Months2006
    
    
    2005Gross Margin Total:Product revenues
    
    $
    8,647
    
    
    $
    10,130Cost of products sold
    
    
    6,140
    
    
    
    5,874Gross profit (product revenues
less cost of products sold)
    
    
    2,507
    
    
    
    4,256Gross margin (gross profit as a
percentage of product revenues)
    
    
    29
    %
    
    
    42
    %Changes in deferred profit on
sales of product to Novogyne
    
    
    (296
    )
    
    
    142Gross profit excluding impact of
deferred profit
    
    
    2,211
    
    
    
    4,398Gross margin excluding impact of
deferred profit
    
    
    26
    %
    
    
    43
    %
  
 24




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Gross Margin  Sales to Novogyne
 Three Months2006
    
    
    2005Gross Margin Novogyne:Product revenues
    
    $
    4,776
    
    
    $
    6,092Cost of products sold
    
    
    2,143
    
    
    
    3,249Gross profit (product revenues
less cost of products sold)
    
    
    2,633
    
    
    
    2,843Gross margin (gross profit as a
percentage of product revenues)
    
    
    55
    %
    
    
    47
    %Changes in deferred profit on
sales of product to Novogyne
    
    
    (296
    )
    
    
    142Gross profit excluding changes in
deferred profit on sales of product
to Novogyne
    
    
    2,337
    
    
    
    2,985Gross margin excluding impact
of deferred profit
    
    
    49
    %
    
    
    49
    %
  Gross Margin  Sales to third parties
 Three Months2006
    
    
    2005Gross Margin Third Parties:Product revenues
    
    $
    3,871
    
    
    $
    4,038Cost of products sold
    
    
    3,997
    
    
    
    2,625Gross profit (product revenues
less cost of products sold)
    
    
    (126
    )
    
    
    1,413Gross margin (gross profit as a
percentage of product revenues)
    
    
    (3
    %)
    
    
    35
    %
 
 25




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##### Table of Contents



Operating Expenses
  Three Months2006
    
    
    2005
    
    
    % ChangeResearch and development
    
    $
    3,482
    
    
    $
    2,893
    
    
    
    20
    %Marketing, general and
administrative
    
    
    4,738
    
    
    
    4,055
    
    
    
    17
    %
 Research and Development
  
 Marketing, General and Administrative
  Other Income and Expenses
 Interest Income
  Income Taxes
  26




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Equity in Earnings of Novogyne
   Three Months2006
    
    
    2005
    
    
    % ChangeGross revenues1
    
    $
    37,269
    
    
    $
    27,334
    
    
    
    36
    %Sales allowances
    
    
    3,793
    
    
    
    3,395
    
    
    
    12
    %Sales returns allowances
    
    
    1,896
    
    
    
    1,266
    
    
    
    50
    %Sales and returns allowances
    
    
    5,689
    
    
    
    4,661
    
    
    
    22
    %Net revenues
    
    
    31,580
    
    
    
    22,673
    
    
    
    39
    %Cost of sales2
    
    
    7,521
    
    
    
    6,100
    
    
    
    23
    %Gross profit
    
    
    24,059
    
    
    
    16,573
    
    
    
    45
    %Gross margin percentage
    
    
    76
    %
    
    
    73
    %Selling, general and
administrative expenses
    
    
    9,157
    
    
    
    8,670
    
    
    
    6
    %Income from operations
    
    
    14,902
    
    
    
    7,903
    
    
    
    89
    %Interest income
    
    
    152
    
    
    
    93
    
    
    
    63
    %Net income
    
    $
    15,054
    
    
    $
    7,996
    
    
    
    88
    %Novens equity in earnings of Novogyne
    
    $
    4,327
    
    
    $
    912
    
    
    
    374
    %
 
 1
    
    Novogynes gross revenues, which are calculated by adding sales allowances and
sales returns allowances to net revenues, are discussed in this section because Novens management
believes it is a useful measure to evaluate and compare Novogynes sales period to period in light
of the significant historic fluctuations in Novogynes sales allowances and returns.2
    
    Included in Novogynes costs of sales is the amortization of the marketing rights
Novogyne acquired for CombiPatch®, which in prior periods was listed as a separate
operating expense in Novogynes statement of operations. Novogyne Net Revenues
  ®  ® ® 
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##### Table of Contents




  ® ®
   ®
 Novogyne Gross Margin
  ®
 Novogyne Selling, General and Administrative Expenses
  28




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##### Table of Contents



Liquidity and Capital Resources
  March 31, 2006
    
    
    December 31, 2005Cash and cash equivalents
    
    $
    31,418
    
    
    $
    66,964Short-term investments
    
    
    50,925
    
    
    
    17,900Working capital
    
    
    96,676
    
    
    
    91,122
  Three Months2006
    
    
    2005Cash flows:Operating activities
    
    $
    (139
    )
    
    $
    1,510Investing activities
    
    
    (35,821
    )
    
    
    (31,931
    )Financing activities
    
    
    414
    
    
    
    778
 Operating Activities
   Investing Activities
   29




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Financing Activities
  Short-Term and Long-Term Liquidity
     
    30




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##### Table of Contents



Aggregate Contractual Obligations
  Critical Accounting Estimates
  Stock-Based Compensation
   31




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##### Table of Contents



Outlook
  
    
    transactions;
    
    changes in Novens or Novogynes accounting or accounting principles (except as
indicated below with respect to Novens method of accounting for equity compensation) or
any of the estimates or judgments underlying our critical accounting policies;
    
    regulatory, technological or clinical study developments;
    
    changes in the supply of, demand for, or distribution of our HT products (including any
changes resulting from competitive HT products, product recalls, or new HT study results);
    
    changes in our business relationships/collaborations; or
    
    changes in the economy or the health care sector generally.
  32




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##### Table of Contents



Equity Compensation Expense.
 Potential Daytrana  Revenues 
 HT Product Revenues 
 Gross Margin   
 Research and Development.
 Marketing, General and Administrative Expense.
 33




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##### Table of Contents



Novogyne.
 Effective Tax Rate.
 Capital Expenditures
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  34




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35




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 ®
 ®
  ® ®
  
 Item 1A. Risk Factors
  36




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number ofShares
    
    
    ApproximatePurchased as
    
    
    Dollar ValuePart of
    
    
    That May YetTotal Number of
    
    
    Average Price
    
    
    Publicly
    
    
    be PurchasedShares
    
    
    Paid
    
    
    Announced
    
    
    under thePurchased
    
    
    Per Share
    
    
    Program
    
    
    Program(1)January 1, 2006 to
January 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    23,711,040February 1, 2006 to
February
28, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    23,711,040March 1, 2006 to
March 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    23,711,040Totals
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    23,711,040
 
 (1)
    
    In March 2003, we announced a stock repurchase program authorizing the repurchase of up to
$25.0 million of our Common Stock. There is no expiration date specified for this program. 
 Item 6. Exhibits
 10.1
    
    Form of Stock Appreciation Rights Agreement (Employee)31.1
    
    Certification of Robert C. Strauss, President, Chief Executive Officer
and Chairman of the Board, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Diane M. Barrett, Vice President and Chief Financial
Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 200232.1
    
    Certification of Robert C. Strauss, President, Chief Executive Officer
and Chairman of the Board, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Diane M. Barrett, Vice President and Chief Financial
Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
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Signatures
  NOVEN PHARMACEUTICALS, INC.Date: May 8, 2006
    
    By:
    
    /s/ Diane M. BarrettDiane M. BarrettVice President andChief Financial Officer
 38