SCHEDULE 14A

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.  )

 

Filed by the Registrant x

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

 

NOVEN PHARMACEUTICALS, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

o  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 6, 2009

Dear Stockholder:

          The 2009 Annual Meeting of Stockholders of Noven Pharmaceuticals, Inc. will convene at 10:00 a.m. on Friday, May 22, 2009. The meeting will be held at the NASDAQ MarketSite, 4 Times Square, New York, NY 10036. Details regarding the business to be conducted at the meeting are described in the accompanying Notice of Annual Meeting and Proxy Statement.

          Your vote on these matters is important. Whether or not you plan to attend the meeting, I hope you will vote as soon as possible. Most of you may now vote your shares over the Internet, as well as by telephone or by mailing a traditional proxy card. Voting in this manner will assure that your shares are voted if you do not attend in person. Please review the instructions on the enclosed proxy card or voting instruction card regarding which of these options is available to you, and how to vote your shares.

          We hope you will participate in your Annual Meeting, if not in person, then by proxy. To attend the meeting, you will need an admission ticket and we ask that you request one by following the procedure on page 1 of the Proxy Statement. We appreciate your continued support.

Sincerely yours,

WAYNE P. YETTER
Chairman of the Board

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TIME		10:00 a.m. on Friday, May 22, 2009
PLACE		NASDAQ MarketSite, 4 Times Square, New York, NY 10036
ITEMS OF BUSINESS		1.		To elect seven members to the Board of Directors.
		2.		To approve Noven’s 2009 Equity Incentive Plan.
		3.		To ratify the appointment of Deloitte & Touche LLP as
				Noven’s independent registered public accounting firm.
		4.		To transact such other business as may properly come before the meeting and any adjournment thereof.
RECORD DATE		You are entitled to vote if you were a Noven stockholder at the close of business on March 25, 2009.
ANNUAL REPORT		Noven’s 2008 Annual Report, which is not a part of the proxy soliciting material, is enclosed.
PROXY VOTING		If you own shares of record, you will find enclosed a proxy card or cards and an envelope in which to return the card(s). Whether or not you plan to attend this meeting, please sign, date and return your enclosed proxy card(s) as soon as possible so your shares can be voted at the meeting in accordance with your instructions. Any proxy may be revoked in the manner described on page 3 in the accompanying Proxy Statement at any time prior to its exercise at the meeting. If you hold your shares in street name, you may instruct your broker or nominee to vote your shares by following instructions that the broker or nominee provides you.

Jeff Mihm
Vice President, General Counsel &
Corporate Secretary

This Proxy Statement and accompanying proxy card are being distributed on or about April 10, 2009.

TABLE OF CONTENTS

		Page
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING			1
PROPOSAL 1 - ELECTION OF DIRECTORS			6
Governance of the Company			8
Related Party Transactions			13
Stockholder Communication with Directors			14
Director Compensation			15
Executive Compensation			17
Compensation Discussion and Analysis			17
Summary Compensation Table			31
Grants of Plan-Based Awards in 2008			33
Outstanding Equity Awards at 2008 Year-End			34
Option Exercises and Stock Vested in 2008			36
Non-qualified Deferred Compensation in 2008			36
Change of Control and Termination Payments			38
PROPOSAL 2 - APPROVAL OF THE NOVEN PHARMACEUTICALS, INC. 2009 EQUITY INCENTIVE PLAN			43
PROPOSAL 3 - RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			50
OTHER INFORMATION			54
Share Ownership of Certain Beneficial Owners and Management			54
Compliance with Section 16(a) of the Securities Exchange Act of 1934			57
Delivery of Voting Materials			57
APPENDIX A — NOVEN PHARMACEUTICALS, INC. 2009 EQUITY INCENTIVE PLAN

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING

Q:		Why am I receiving these materials?
A:		The Board of Directors (the “Board”) of Noven Pharmaceuticals, Inc. (“Noven”) is providing these proxy materials to solicit your proxy in connection with Noven’s annual meeting of stockholders, which will take place on Friday, May 22, 2009. You are invited to attend the meeting and are requested to vote on the proposals described in this Proxy Statement.
Q:		What information is contained in these materials?
A:		The information included in this Proxy Statement relates to the proposals to be voted on at the meeting, the voting process, the compensation of directors and Noven’s most highly paid officers, and other required information. We are also sending Noven’s 2008 Annual Report with these materials, but it does not constitute part of our proxy soliciting material.
Q:		How can I attend the annual meeting of stockholders?
A:		A stockholder who wishes to attend in person must have a ticket of admission. Each stockholder may request one ticket either by mail addressed to the Corporate Secretary in care of Noven Pharmaceuticals, Inc., 11960 SW 144th Street, Miami, FL 33186 or by e-mail to abowman@noven.com. If you forget to bring your admission ticket, you can attend the annual meeting only if you are a stockholder on the Company’s records and offer satisfactory identification. If you hold your shares of common stock through a broker, bank or nominee, you will need a voting instruction card from your broker as proof of ownership. All stockholders will be required to present valid picture identification prior to admittance. For directions to the annual meeting of stockholders, please contact the Corporate Secretary in care of Noven Pharmaceuticals, Inc., 11960 SW 144th Street, Miami, FL 33186 or by e-mail to abowman@noven.com.
Q:		What proposals will be voted on at the meeting?
A:		There are three proposals scheduled to be voted on at the meeting:

	•		Election of seven directors;
	•		Approval of the Noven Pharmaceuticals, Inc. 2009 Equity Incentive Plan (the “2009 Plan”); and
	•		Ratification of the appointment of Deloitte & Touche LLP as Noven’s independent registered public accounting firm.

		We will also consider and vote upon any other proposal properly brought before the meeting and any adjournment thereof.
Q:		What are the Board’s voting recommendations?

A:

The Board recommends that you vote your shares:

	•		“For” each of the nominees named herein to the Board;
	•		“For” the approval of the 2009 Plan; and
	•		“For” the ratification of the appointment of Deloitte & Touche LLP.

Q:		What shares can I vote?
A:		You may vote all shares that you owned as of March 25, 2009, which is the record date. These shares include (1) those held directly in your name as the stockholder of record and (2) those held for you as the beneficial owner through a stockbroker, bank or other nominee. Each share of Noven’s common stock outstanding as of the close of business on March 25, 2009, the record date, is entitled to one vote at the annual meeting. On the record date, approximately 24,913,418 shares of common stock were issued and outstanding.
Q:		What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:		Stockholder of Record
		If your shares are registered directly in your name with Noven’s transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record for those shares and we are sending these proxy materials, which includes a proxy card which you may use, directly to you. As the stockholder of record, you have the right to grant your proxy directly to the individuals named in the enclosed proxy card or to vote in person at the meeting.
		Beneficial Owner
		If you hold shares in a stock brokerage account or through a bank or other nominee, you are considered the beneficial owner of shares held in street name and your broker or nominee is forwarding these proxy materials to you. Your broker or nominee is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker on how to vote, but since you are not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a signed proxy from the record holder giving you the right to vote the shares. As a beneficial owner, you are, however, welcome to attend the meeting. Your broker or nominee has enclosed a voting instruction card for you to use.
Q:		How can I vote my shares in person at the meeting?
A:		You may vote shares you hold directly in your name as the stockholder of record in person at the annual meeting. If you choose to do so, please bring the enclosed proxy card or proof of identification. You will also need an admission ticket and we ask that you request one by following the procedure on page 1 of this Proxy Statement. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the meeting.

		If you hold your shares in street name, you must obtain a signed proxy from the record holder in order to vote these shares in person at the meeting. You will also need an admission ticket and we ask that you request one by following the procedure on page 1 of this Proxy Statement.
Q:		How can I vote my shares without attending the meeting?
A:		Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct your vote without attending the meeting. If you hold your shares directly, you may vote by granting a proxy by signing and returning the enclosed proxy card. If you hold your shares in street name, you may instruct your broker or nominee to vote your shares by following instructions that the broker or nominee provides for you. Most brokers offer voting over the Internet, by telephone or by mail. Please refer to the instructions included on your proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee.
Q:		May I change my vote?
A:		Yes, you may change your proxy instructions at any time prior to the vote at the annual meeting. If you are a stockholder of record, you must (1) file with Noven’s Corporate Secretary a written notice of revocation or (2) timely deliver a valid, later-dated proxy. For shares you own beneficially, you may change your vote by submitting new voting instructions to your broker or nominee. Your attendance at the meeting will not revoke your previously granted proxy unless you give written notice of revocation to Noven’s Corporate Secretary before the vote at the meeting or you vote by written ballot at the meeting.
Q:		How are votes counted?
A:		In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees. For the other proposals, you may vote “FOR”, “AGAINST” or “ABSTAIN”. If you “ABSTAIN”, it has the same effect as a vote “AGAINST”. If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board.
Q:		What is the voting requirement to approve each of the proposals?
A:		In the election of directors, each director requires the affirmative “FOR” vote of a plurality of those shares represented, in person or by proxy, and entitled to vote at the meeting. The approval of the 2009 Plan and the ratification of the appointment of Deloitte & Touche LLP require the affirmative “FOR” vote of a majority of those shares represented, in person or by proxy, and entitled to vote at the meeting.
Q:		What happens if I do not provide voting instructions to my broker?

A:		If you are a beneficial owner and do not provide the stockholder of record with voting instructions, your broker or other nominee, in its discretion, may either leave your shares unvoted or vote your shares on routine matters. The election of directors and the proposal to ratify the appointment of Deloitte & Touche LLP should be treated as routine matters. The proposal to approve the 2009 Plan is not considered a routine matter and, as a result, without your voting instructions, your broker or nominee cannot vote your shares. If your broker or other nominee does not vote your shares, your shares will constitute broker non-votes, as described in “What is the quorum requirement for the meeting?” below. In tabulating the voting result for any particular proposal, shares which constitute broker non-votes are not considered represented at the meeting.
Q:		What does it mean if I receive more than one proxy or voting instruction card?
A:		It means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.
Q:		Where can I find the voting results of the meeting?
A:		We will announce preliminary voting results at the meeting and publish final results in Noven’s quarterly report on Form 10-Q for the second quarter of 2009.
Q:		What happens if additional proposals are presented at the meeting?
A:		Other than the three proposals described in this Proxy Statement, we do not expect any matters to be presented for a vote at the annual meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of Noven’s nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.
Q:		What is the quorum requirement for the meeting?
A:		The quorum requirement for holding the meeting and transacting business is a majority of the outstanding shares entitled to be voted. The shares may be present in person or represented by proxy at the meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote such shares.
Q:		Who will bear the cost of soliciting votes for the meeting?
A:		Noven will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by

		Noven’s directors, officers, and employees, who will not receive any additional compensation for such solicitation activities. We have retained the services of Georgeson Shareholder Communications, Inc. to aid in the solicitation of proxies (and for certain consulting services related to Proposal 2) for a fee of approximately $11,000 plus per call fees for any individual solicitations and certain out of pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.
Q:		May I propose actions for consideration at next year’s annual meeting of stockholders or nominate for election at next year’s annual meeting of stockholders individuals to serve as directors?
A:		Yes, you may submit proposals for consideration at future stockholder meetings, including director nominations.
		Stockholder Proposals for Presentation at Meeting: Our By-Laws govern the submission of nominations for director or other business proposals that a stockholder wishes to have considered at a meeting of stockholders, but which are not included in Noven’s Proxy Statement for that meeting. Under our By-Laws, nominations for director or other business proposals to be addressed at our next annual meeting may be made by a stockholder entitled to vote who has delivered a notice to the Corporate Secretary of Noven no later than the close of business on January 10, 2010 and not earlier than December 11, 2009, which dates are based on the mailing of this Proxy Statement on April 10, 2009. The notice must contain the information required by the By-Laws.
		These advance notice provisions are in addition to, and separate from, the requirements that a stockholder must meet in order to have a proposal included in the Proxy Statement under the rules of the U.S. Securities and Exchange Commission (“SEC”).
		A proxy granted by a stockholder will give discretionary authority to vote on any matters introduced pursuant to the above advance notice By-Law provisions, subject to the applicable rules of the SEC.
		Stockholder Proposals for Inclusion in Proxy: In order for a stockholder proposal to be considered for inclusion in Noven’s Proxy Statement for next year’s annual meeting, the written proposal must be received by Noven’s Corporate Secretary no later than December 11, 2009. Such proposals also will need to comply with SEC regulations regarding the inclusion of stockholder proposals in company sponsored proxy materials.
		Copy of By-Law Provisions: You may contact Noven’s Corporate Secretary at Noven’s headquarters for a copy of the relevant By-Law provisions regarding the requirements for making stockholder proposals and nominating director candidates.

PROPOSAL 1 — ELECTION OF DIRECTORS

          The seven persons named below were designated by the Board as nominees for election as directors. All of the nominees have served as directors since the last annual meeting. Sidney Braginsky, a current Noven director, will be retiring on the date of the meeting and will not stand for re-election. Information regarding the business experience of each nominee and their service on boards of directors of public companies is provided below. All directors are elected annually to serve until the next annual meeting and until their respective successors are elected.

          The Board recommends a vote FOR the election to the Board of each of the following nominees.

Peter Brandt Director since 2008 Age 52		Mr. Brandt was appointed to Noven’s Board and to the offices of President and Chief Executive Officer in April 2008. From 1981 until 2007, Mr. Brandt served in a number of executive positions at Pfizer, Inc. (pharmaceuticals). He served as Pfizer’s President — U.S. Pharmaceuticals Operations from August 2006 until January 2007 and as its Senior Vice President — U.S. Pharmaceuticals Operations from January 2006 to August 2006. From 2004 to 2006, Mr. Brandt served as President - Latin America Operations and as Senior Vice President Worldwide Pharmaceuticals — Finance, IT, Planning and Business Development, Pfizer Health Solutions. From 1998 to 2004, he served as Senior Vice President Worldwide Pharmaceuticals, Finance, Planning and Business Development, Pfizer Health Solutions.
John G. Clarkson, M.D. Director since 2000 Age 66		Dr. Clarkson is the Executive Director of the American Board of Ophthalmology and the Dean Emeritus and Professor of Ophthalmology, Miller School of Medicine at the University of Miami. From 1995 to 2006, he served as Professor and Senior Vice President for Medical Affairs and Dean, University of Miami School of Medicine. Dr. Clarkson serves as a director of the American Board of Medical Specialties and as a trustee for the Evelyn F. McKnight Brain Research Foundation.
Donald A. Denkhaus Director since 2004 Age 63		Mr. Denkhaus has, since January 2004, served as the executive chairman of TM Systems, LLC (international language services). Since 2005, he has also served as President and Chief Executive Officer of Integrity Risk Advisors, Inc. (consulting). Mr. Denkhaus was a partner with Arthur Andersen LLP from 1980 to 2002 and served as Arthur Andersen’s audit practice director responsible for Florida and Puerto Rico from 1999 to 2002.

Pedro P. Granadillo Director since 2004 Age 61		Mr. Granadillo was employed by Eli Lilly and Company (pharmaceuticals) from 1970 until 2004. From 1998 to 2004, he served as Eli Lilly’s Senior Vice President overseeing manufacturing, quality and human resources and from 1993 to 1998, he served as Vice President of Human Resources. Mr. Granadillo serves on the board of directors of Nile Therapeutics, Inc. (biopharmaceuticals) and Haemonetics Corporation (medical devices).
Phillip M. Satow Director since 2007 Age 67		Mr. Satow has been a director of Noven since August 2007. From 2004 until August 2007, he served as Chief Executive Officer of JDS Pharmaceuticals, LLC (a company he co-founded, which Noven acquired in August 2007 and which is now known as Noven Therapeutics). In 2000, Mr. Satow co-founded and since such time has served as the President of the Board of Directors of The Jed Foundation, a non-profit organization focused on college mental health and suicide prevention. In 1998, Mr. Satow was appointed President of Forest Pharmaceuticals, a wholly-owned subsidiary of Forest Laboratories, Inc. (pharmaceuticals). From 1985 to 1999, he held a variety of executive positions at Forest Laboratories, including as its Executive Vice President. Prior to joining Forest Laboratories, he served as Vice President and General Manager of the Wallace Laboratories Division of Carter-Wallace, Inc. Previously, Mr. Satow held a variety of executive positions at Pfizer, Inc. over a 14 year period, including Director of Marketing, Pfizer Laboratories, and Vice President, Pfizer Europe. In addition to serving as a director of Noven, Mr. Satow currently serves on the board of directors of Crucell NV (biotechnology).
Robert G. Savage Director since 2004 Age 55		Mr. Savage has been the President of Strategic Imagery LLC (pharmaceutical consulting) since May 2003. He served as Group Vice President and President — General Therapeutics & Inflammation Business of Pharmacia Corporation from 2002 until its acquisition by Pfizer, Inc. in 2003. From 1996 through 2001, Mr. Savage served Johnson & Johnson in a variety of roles, most recently as Worldwide Chairman of Johnson & Johnson’s Pharmaceutical Group. From 1985 to 1996, he served Roche Holding AG in a variety of marketing, business development and operations positions, most recently as Vice President — Marketing, Hoffmann-La Roche, Inc. Mr. Savage serves as the non-executive chairman of EpiCept Corporation (pharmaceuticals) and the presiding director of The Medicines Company, Inc. (pharmaceuticals).
Wayne P. Yetter Director since 2001 Age 63		Mr. Yetter was the Chief Executive Officer of Verispan LLC (health care information) from September 2005 until August 2008 when Verispan was acquired by SDI Health, Inc. From November 2004 to September 2005, he served as the Chief Executive Officer of Odyssey Pharmaceuticals, Inc., the specialty pharmaceutical division of Pliva d.d.

		From 2003 to 2005, he served on the Advisory Board of Alterity Partners (mergers and acquisitions advisory firm). From September 2000 to June 2003, Mr. Yetter served as Chairman and Chief Executive Officer of Synavant Inc. (pharmaceutical marketing/technology services). From 1999 to 2000, Mr. Yetter served as Chief Operating Officer at IMS Health, Inc. (information services for the health care industry). From 1997 to 1999, he served as President and Chief Executive Officer of Novartis Pharmaceuticals Corporation (pharmaceuticals). From 1994 to 1997, he served as President and Chief Executive Officer of Astra Merck, Inc. (pharmaceuticals). From 1991 to 1994, Mr. Yetter served as General Manager and then President of Astra Merck, a division of Merck & Co. Mr. Yetter serves on the board of directors of EpiCept Corporation (pharmaceuticals), Synvista Therapeutics, Inc. (pharmaceuticals) and InfuSystem Holdings, Inc. (infusion services).

Governance of the Company

          Pursuant to Noven’s By-Laws and the Delaware General Corporation Law, Noven’s business, property and affairs are managed under the direction of the Board.

          The Board held eight meetings in 2008, and each director who served as a director during 2008 attended more than 75% of the aggregate of the meetings of the Board and the Committees on which he served. Noven typically schedules a Board meeting in conjunction with Noven’s annual meeting and expects that directors will attend the annual meeting, absent a valid reason, such as a schedule conflict. Last year, seven of the eight directors attended Noven’s annual meeting.

          The Board has three standing committees: (1) Nominating and Corporate Governance, (2) Audit and (3) Compensation. The Board has adopted a written charter for each of the three committees. The committee charters are posted in the “Investor Relations-Governance” section of our company website: www.noven.com. Under these charters, each of the standing committees has the authority to, among other things, retain and pay the fees of any advisor it deems necessary to carry out its duties. In addition to the three standing committees, the Board may establish such other standing or special committees as it deems necessary or advisable. Attendance fees for the meetings of the special committees are paid in the same amounts as meetings of the Board and three standing committees, as described below under “Director Compensation.”

          As an important part of its governance of the company, Noven’s Board plans for the succession to the position of Chief Executive Officer. During the second half of 2007 through the first four months of 2008, the Board oversaw the transition of Noven’s chief executive leadership from Robert C. Strauss, who retired from Noven effective January 2, 2008, to Jeffrey F. Eisenberg, who served as Interim Chief Executive Officer and Executive Vice President from January 2008 through the appointment of Peter Brandt to the offices of President and Chief Executive Officer and to the Board effective April 29, 2008. Mr. Eisenberg continues to serve as Noven’s Executive Vice President and as President of Novogyne Pharmaceuticals.

          In connection with its succession planning, the Board separated the roles of Chairman of the Board and Chief Executive Officer. In January 2008, Wayne P. Yetter was appointed Noven’s non-executive Chairman of the Board upon Mr. Strauss’ retirement. Mr. Yetter previously served as Noven’s lead independent director.

          The Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. The Board has also adopted Corporate Governance Guidelines which, in conjunction with Noven’s Certificate of Incorporation, By-Laws, committee charters and the Code of Business Conduct and Ethics, form the framework for the governance of Noven. Noven’s Corporate Governance Guidelines and the Code of Business Conduct and Ethics are posted in the “Investor Relations-Governance” section of our company website: www.noven.com. If, in the future, we should amend our Code of Business Conduct and Ethics or grant a waiver to our Chief Executive Officer, Chief Financial Officer or principal accounting officer with respect to our Code of Business Conduct and Ethics, then we will post the amendment or a description of the waiver in the “Investor Relations-Governance” section of our company website. We did not amend our Code of Business Conduct and Ethics or grant any such waivers during 2008.

          Noven’s Corporate Governance Guidelines provide that the Board should have a significant majority of independent directors and that the expectation of the Board is that the number of employee directors should not exceed two. The Board has determined that all of the directors, other than Messrs. Brandt and Satow, are “independent” as such term is defined by the applicable listing standards of the Nasdaq Global Select Market. The Board based this determination primarily on a review of the responses of the directors to questions regarding their employment, affiliations and family and other relationships.

Nominating and Corporate Governance Committee

          The Nominating and Corporate Governance Committee provides assistance to the Board in identifying, screening and recommending candidates to serve as directors of Noven. The Committee also oversees matters of corporate governance and provides advice to the Board with respect to Board organization, membership and function.

          The Nominating and Corporate Governance Committee is responsible for proposing to the Board nominees for election or re-election to the Board, based upon recommendations from the Chairman, the Chief Executive Officer, other Board members, and Noven stockholders. Recommendations from stockholders should be submitted to Noven in accordance with the procedures set forth in the Q&A information on page 5. The Nominating and Corporate Governance Committee is empowered to engage third-party executive search firms to assist it in identifying candidates.

          Board candidates are considered by the Nominating and Corporate Governance Committee on a case-by-case basis using various criteria, such as a candidate’s business and industry experience, personal and professional reputation, professional skill, status as an “independent” director, financial expertise and the current composition of the Board. There are no minimum criteria for nomination to the Board, and there are no separate processes or criteria for evaluating candidates nominated by stockholders. After completing its review of the candidate and conducting in-person or telephone interviews, the Nominating and Corporate Governance Committee recommends which candidate or candidates should be nominated for election to the Board. As a general matter, the Nominating and Corporate Governance Committee

believes that the continuing services of qualified incumbents promotes stability and continuity in the Board, contributing to the Board’s ability to work as a collective body, while giving Noven the benefit of the familiarity and insight into the Company’s affairs that its directors have accumulated during their tenure. Noven has no term limits or mandatory retirement age with respect to its Board members.

          In addition to identifying, screening and recommending qualified candidates to serve as directors, the Nominating and Corporate Governance Committee:

	•		reviews potential conflicts of interest involving prospective Board members;
	•		annually reviews and makes recommendations to the Board concerning the Corporate Governance Guidelines;
	•		reviews the structure of the Board and the skills and experience of its members;
	•		studies and makes recommendations to the Board concerning the size, composition, compensation and functioning of the Board; and
	•		reviews and makes recommendations to the Board regarding the composition and responsibilities of Board Committees.

          All of the members of the Nominating and Corporate Governance Committee are “independent” as such term is defined by the applicable listing standards of the Nasdaq Global Select Market.

Members: Mr. Savage (Chairperson) and Dr. Clarkson
Meetings held last year: Three

Audit Committee

          The primary responsibility of the Audit Committee is to oversee Noven’s financial reporting processes and the audits of Noven’s financial statements on behalf of the Board and to report the results of its activities to the Board. The Committee:

	•		is directly responsible for the appointment and termination (subject, if applicable, to stockholder ratification), compensation, evaluation and oversight of the work of the independent registered public accounting firm;
	•		oversees the resolution of disagreements between management and the independent registered public accounting firm in the event that they arise, including resolution of disagreements between management and the auditor regarding financial reporting;
	•		reviews with the individual responsible, if any, for the internal audit function, the independent registered public accounting firm and management of Noven the scope of their proposed audits for the current year and the proposed audit procedures to be utilized;
	•		reviews and pre-approves both audit and permissible non-audit services provided by the independent registered public accounting firm and their possible impact on that firm’s independence;

	•		reviews and discusses with the independent registered public accounting firm any relationships between the auditor and Noven that may impact that firm’s independence;
	•		reviews and advises the Board on the selection, performance, compensation and removal of the individual, if any, responsible for Noven’s internal audit function, and the activities, organizational structure, and qualifications of the individuals involved in the internal audit function;
	•		reviews and discusses with management and the independent registered public accounting firm the financial statements of Noven to be included in its periodic filings with the SEC and other relevant reports (such as reports of internal control over financial reporting) or financial information submitted by Noven to any governmental body, or the public;
	•		discusses with management and the independent registered public accounting firm the quality, not just acceptability, of the accounting principles (including accounting policies that may be viewed as critical), and the reasonableness of significant judgments, and reviews and considers with the independent registered public accounting firm the matters required to be discussed by Statement of Auditing Standards No. 61, Communication With Audit Committees, as amended by SASs 89 and 90 and Rule 2-07 of Regulation S-X;
	•		discusses with management and the independent registered public accounting firm Noven’s critical accounting policies and confers with management and the independent registered public accounting firm on significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects on the financial statements of alternative methods permitted by generally accepted accounting principles;
	•		discusses with management and the independent registered public accounting firm as appropriate the integrity of Noven’s financial reporting processes and the quality and adequacy of Noven’s internal control over financial reporting and disclosure controls, including Noven’s systems to monitor and manage business risks;
	•		reviews management’s assertion on its assessment of the effectiveness of internal control over financial reporting as of the end of the most recent calendar year, as well as all material issues raised by management’s assessment of internal control over financial reporting;
	•		meets with the independent registered public accounting firm outside the presence of management, and discusses the independent registered public accounting firm’s evaluation of Noven’s financial and accounting personnel and the cooperation that the independent registered public accounting firm received during the course of the audit;
	•		reviews and, if appropriate, approves or ratifies “related party transactions”;
	•		establishes procedures for the receipt, retention and treatment of complaints regarding

			Noven’s accounting, internal accounting controls, or auditing matters; and
	•		sets Noven’s hiring policies with respect to the hiring of current or former partners, principals, or professional employees of the independent registered public accounting firm.

          The Board of Directors, in its business judgment, has determined that each Audit Committee member is “independent” as such term is defined by the applicable listing standards of the Nasdaq Global Select Market and under Section 10A(m)(3) of the Securities Exchange Act of 1934. Noven has identified Donald A. Denkhaus as an “audit committee financial expert” as that term is defined in applicable regulations of the SEC.

Members: Messrs. Denkhaus (Chairperson), Braginsky and Granadillo
Meetings held last year: Eight

Compensation Committee

          The Compensation Committee provides assistance to the Board in fulfilling its responsibility to oversee and participate in the creation and administration of Noven’s executive compensation programs and practices. The Committee:

	•		reviews and determines the annual salary, bonus, equity compensation and other benefits of the executive officers of Noven;
	•		reviews, approves and, if appropriate, negotiates all employment, termination and other compensation-related agreements with the executive officers of Noven;
	•		reviews the operation of Noven’s executive compensation programs and establishes and reviews policies for their administration; and
	•		administers Noven’s equity compensation plans including approving grants of equity compensation under Noven’s 1999 Long-Term Incentive Plan.

          The Compensation Committee has retained a compensation consultant to assist the Compensation Committee in the design and implementation of various compensation policies and programs for Noven’s executive officers. This consultant, Pearl Meyer & Partners (“PM&P”), reports directly to the Compensation Committee and any new projects undertaken by PM&P on behalf of Noven must be approved by the Chairman of the Compensation Committee.

          Noven’s Chief Executive Officer and Vice President—Human Resources work closely with the Compensation Committee on compensation matters and Noven’s Chief Executive Officer recommends to the Compensation Committee compensation amounts for Noven’s other executive officers. The Compensation Committee meets with the Chief Executive Officer to discuss his performance, but ultimately decisions regarding his compensation and the terms of his employment agreement are made solely based upon the Compensation Committee’s deliberations. The Compensation Committee has final approval of all compensation amounts and formulas applicable to benefit plans in which executive officers participate.

          All of the members of the Compensation Committee are “independent” within the meaning of the applicable listing standards of the Nasdaq Global Select Market.

Members: Dr. Clarkson (Chairperson), Messrs. Granadillo and Savage
Meetings held last year: Five

Related Party Transactions

          The Board has adopted a policy and procedures for the review and approval of transactions in which Noven and its directors, executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest and whether Noven should enter into the applicable transaction. The policy covers any related party transaction that meets the minimum threshold for disclosure in Noven’s proxy statement under the relevant SEC rules. The Audit Committee is responsible for reviewing and, if appropriate, approving or ratifying any related party transactions.

          In determining whether to approve, disapprove or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, (i) whether the transaction is on terms no less favorable to Noven than terms that would otherwise be generally available to Noven if the transaction was entered into under the same or similar circumstances with a party unaffiliated with Noven and (ii) the extent of the interest of the related party in the transaction.

          Set forth below is a description of certain transactions between Noven and Mr. Phillip M. Satow, a current Noven director and a nominee for director at the 2009 Annual Meeting of Stockholders.

          On August 14, 2007 (the “Closing Date”), Noven acquired JDS Pharmaceuticals, LLC (now known as “Noven Therapeutics”), which was a privately-held specialty pharmaceutical company founded by Phillip Satow and his son Michael Satow. In connection with Noven’s acquisition of this company, Noven entered into a Non-Competition Agreement and a Consulting Agreement with Phillip Satow and a Non-Competition and Employment Agreement with Michael Satow. As described in more detail below, the Consulting Agreement with Phillip Satow expired in August 2008 and the employment term of the Non-Competition and Employment Agreement with Michael Satow expired in February 2008.

          The Consulting Agreement (the “Consulting Agreement”) with Phillip Satow commenced in August 2007 and expired in August 2008. Under the Consulting Agreement, Mr. Satow agreed to provide such consulting services with respect to Noven Therapeutics’ business as requested by Noven. Mr. Satow was paid a consulting fee of $250 per hour of services rendered and be reimbursed for the necessary and reasonable expenses he incurred in the performance of his services. The total fees paid to Mr. Satow under the Consulting Agreement in 2008 were $50,500.

          Pursuant to the Non-Competition and Employment Agreement (the “Employment Agreement”), dated August 2007, with Michael Satow, Noven Therapeutics employed Michael Satow for a period of six months, from the Closing Date until February 2008 (the “Retention Period”), at the same rate of base salary as in effect immediately prior to the Closing Date, which was $265,200 per year. Mr. Satow, who ceased to be a Noven Therapeutics employee at the end of the Retention Period, was paid the following additional amounts under the

Employment Agreement for his continued employment through the Retention Period: (i) an annual bonus for Noven Therapeutics’ 2007 fiscal year of $63,000; and (ii) a lump sum payment of $132,600 (together, the “Bonus Payments”). Under the Employment Agreement, Mr. Satow also received a lump sum cash payment of $265,200.

          Each of Phillip Satow and Michael Satow continue to be bound by certain non-competition obligations to Noven that continue in effect through August 2010 for Phillip Satow and through August 2009 for Michael Satow. The Non-Competition Agreement (the “Non-Competition Agreement”), dated August 14, 2007, with Phillip Satow restricts his ability, during the three-year period which commenced on the Closing Date, to become “associated with” (as such term is defined in the Non-Competition Agreement) any business that is engaged in the acquisition, manufacture, development or sale of pharmaceutical or biotechnology products that compete with any Noven Therapeutics products that are sold or are under active development. In accordance with the Non-Competition Agreement, Mr. Satow received on the Closing Date stock-settled stock appreciation rights (“SSARs”) with respect to 44,297 shares of Noven common stock, which reflected an aggregate Black-Scholes value equal to $265,200. All such SSARs fully vested upon grant and are exercisable at an exercise price of $16.67 per share for a period of seven years from the grant date.

          The foregoing descriptions of the Non-Competition Agreement, the Consulting Agreement and the Employment Agreement are qualified in their entirety by reference to the full text of such agreements, which Noven previously filed as exhibits to its reports filed with the SEC.

Stockholder Communication with Directors

          As specified in Noven’s Corporate Governance Guidelines, Noven stockholders who want to communicate with the Board or any individual director may write to:

Noven Pharmaceuticals, Inc.
11960 SW 144^th Street
Miami, FL 33186
Attn: General Counsel

          The letter should include a statement indicating that the sender is a Noven stockholder. The General Counsel will review all stockholder letters to the Board and depending on the subject matter will:

	•		Regularly forward any letter that relates to the function of the Board or committees of the Board (or is otherwise appropriate for Board attention) to the director or directors to whom it is addressed;
	•		Attempt to handle the inquiry directly if it relates to routine or ministerial matters, including requests for information about Noven and stock-related matters; or
	•		Not forward the letter if it relates to an improper or irrelevant topic.

          The General Counsel or another member of management will, at each meeting of the Board, present a summary of all letters received since the last meeting that were not forwarded to the Board and will make those letters available to the Board upon request.

Director Compensation

          The following table provides information on Noven’s compensation and reimbursement practices for non-employee directors. Directors who are employed by Noven do not receive any additional compensation for their Board activities and are not included in this table.

Director Compensation in 2008

																		Change
																		in
																		Pension
																		Value
														Non-				and Non-
														Equity				Qualified
		Fees												Incentive				Deferred				All
		Earned or				Stock				Option				Plan				Compen-				Other
		Paid in				Awards				Awards				Compen-				sation				Compen-
Name		Cash				(1)(2)				(2)(3)				sation				Earnings				sation				Total
Sidney Braginsky		$	33,000			$	118,750			$	0			$	0			$	0			$	0			$	151,750
John G. Clarkson			39,750				118,750				0				0				0				0				158,500
Donald A. Denkhaus			43,500				118,750				0				0				0				0				162,250
Pedro P. Granadillo			46,500				118,750				0				0				0				0				165,250
Phillip M. Satow(4)			24,750				93,750				0				0				0				0				118,500
Robert G. Savage			41,250				118,750				0				0				0				0				160,000
Wayne P. Yetter			90,233				118,750				0				0				0				0				208,983

						Shares of
						Common Stock
						Underlying
		Outstanding				Outstanding
Name		Stock Awards				Option Awards
Sidney Braginsky			20,219				37,500
John G. Clarkson			20,219				15,000
Donald A. Denkhaus			20,219				30,000
Pedro P. Granadillo			20,219				22,500
Phillip M. Satow			19,119				0
Robert G. Savage			20,219				30,000
Wayne P. Yetter			20,219				40,000

          Noven uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, Noven considers the significant amount of time that directors expend in fulfilling their duties to Noven as well as the skill-level required by Noven of members of the Board. The Board sets director compensation based on the recommendations of the Nominating and Corporate Governance Committee and Compensation Committee.

Cash Compensation Paid to Board Members

          Each non-employee director receives an annual cash retainer of $20,000. For his services as Noven’s Non-Executive Chairman of the Board, Mr. Yetter receives an annual retainer of $50,000. Following a review of benchmark data prepared by PM&P and in recognition of the increased workload for those directors serving as committee chairs, the Board decided, effective May 2009, to increase by $5,000 the annual retainers for the chairs of the standing committees resulting in the amounts set forth below:

Committee		Annual Retainer to Chair
Audit		$	15,000
Compensation		$	10,000
Nominating and Corporate Governance		$	10,000

          The cash retainers are paid following the annual meeting of stockholders on a quarterly basis in advance. Non-employee directors receive attendance fees of $1,500 for each Board and committee meeting attended in person and $750 for each Board and committee meeting attended by telephone. Noven reimburses directors for their expenses incurred related to their Board membership.

Equity Compensation Paid to Board Members

          Under Noven’s current director compensation program, each non-employee director is granted restricted stock valued at $150,000 upon election to the Board and then receives annual grants of restricted stock valued at $125,000 upon re-election to the Board at Noven’s annual meeting. Following a review of benchmark data prepared by PM&P, and in light of the significant responsibilities associated with the role of Noven’s non-executive Chairman of the Board, the Board increased the value of the annual restricted stock grant for the position of non-executive Chairman from $125,000 to $155,000 effective May 2009. The Board may increase or decrease the value of the awards from time to time based on such factors as the Board deems relevant. The number of shares of restricted stock granted will be determined based on the market price of Noven’s common stock on the date of grant.

Deferred Compensation Program

          Directors can defer receipt of their fees and their restricted stock grants by participating in Noven’s non-qualified deferred compensation plan. A more complete description of the plan is provided below on page 36 under “Non-qualified Deferred Compensation in 2008.”

Executive Compensation

Compensation Discussion and Analysis

          This section discusses Noven’s compensation policies and programs applicable to the eight executive officers named in the Summary Compensation Table on page 31 (collectively, these individuals are referred to as the “named executive officers”). Under its charter, the Compensation Committee is responsible for the review and determination of compensation for Noven’s executive officers. No discussion or analysis of the compensation determinations made by the Compensation Committee with respect to Mr. Mantelle are included in this section because he ceased to be an “executive officer” (as such term is defined in the regulations of the SEC) in 2008 in connection with the hiring of Mr. Dinh to serve as Noven’s Vice President and Chief Scientific Officer.

Compensation Philosophy and Objectives

          The core objectives of Noven’s compensation programs are to secure and retain the services of high quality executives and to provide compensation to Noven’s executives that is commensurate and aligned with company performance and long-term stockholder value.

          Noven seeks to achieve these objectives through three principal compensation programs. Each of these programs has a different purpose and is intended to reward achievement of different goals.

Program		Purpose
Base Salary and Benefits		Recruit and retain key employees
Annual Incentive Plan		Reward the achievement of selected annual financial and non-financial goals
Long-term Incentive Pay		Enhance long-term stockholder value by aligning the interests of executives with those of stockholders

          These compensation programs are designed to reward achievement of annual and long-term objectives. Achievement of annual objectives is rewarded through the annual incentive plan, while long-term incentive pay in the form of equity grants is intended to link a significant portion of compensation to long-term stock price appreciation realized by Noven’s stockholders.

Pay Levels and Mix

          Pay levels are generally established with reference to Noven’s Peer Companies (as described below) as follows:

Program		Targeted Level
Base Salary		Median to Peer Companies
Annual Incentive Award		Median to Peer Companies
Long-term Incentive Pay		75th Percentile to Peer Companies

          Together, these target pay levels are designed to result in total target compensation (base salary, the annual incentive award and value at grant of the equity award) opportunities falling between the median and the 75^th percentile of the Peer Companies. Noven’s target compensation levels have been selected to attract the talent needed to: maintain and advance Noven’s position as a leading transdermal drug delivery company; advance the operations of Novogyne Pharmaceuticals, Noven’s joint venture with Novartis; and advance the operations of Noven Therapeutics, Noven’s specialty pharmaceutical unit.

          Noven’s target pay levels reflect its philosophy that a significant percentage of an executive officer’s total compensation should be tied to performance, and therefore be at risk. Noven believes that individuals with greater roles and responsibilities associated with achieving Noven’s performance targets (such as the CEO) should bear a greater proportion of the risk that those goals may not be achieved and receive a greater proportion of the reward if those goals are met or surpassed.

          In designing Noven’s executive compensation programs, the Compensation Committee recognizes that incentive compensation programs such as Noven’s Annual Incentive Plan (“AIP”) and stock-settled stock appreciation rights (“SSARs”) have the inherent but unintended potential for creating incentives for executive officers to take unnecessary or excessive risks in order to trigger payments under such programs.

The Compensation Committee believes that Noven’s compensation programs strike an appropriate balance between incentive and non-incentive compensation and that Noven’s incentive programs likewise reflect an appropriate balance between short-term and long-term incentives and between cash and equity payments. Based in part on an enterprise-wide risk assessment reviewed by Noven’s Board in February 2009, the Compensation Committee believes that Noven’s compensation programs are appropriate given Noven’s business and related circumstances and do not encourage unnecessary or excessive risk-taking by executive officers.

Benchmarking

     The Compensation Committee has retained a compensation consultant every other year since 2001 to assist in the benchmarking process. In 2007, the Compensation Committee engaged Pearl Meyer & Partners (“PM&P”) to conduct an independent review of Noven’s executive compensation programs. As part of this engagement, PM&P reviewed the list of companies used by Noven for benchmarking purposes. Based on this review, the Compensation Committee selected the following 21 companies as Noven’s peer companies in 2007:

Adams Respiratory Therapeutics*		Enzon Pharmaceuticals		Nektar Therapeutics
Albany Molecular Research		Intermune		Pharmion*
Bentley Pharmaceuticals*		Ligand Pharmaceutical		Salix Pharmaceuticals
Biomarin Pharmaceutical		Martek Biosciences		Savient Pharmaceuticals
Bradley Pharmaceuticals*		Matrixx Initiatives		Sciele Pharma*
Cubist Pharmaceuticals		Myriad Genetics		Techne
Digene*		Nabi Biopharmaceuticals		Vertex Pharmaceuticals

          These companies, which are pharmaceutical-related companies, were chosen primarily on the basis of revenues. To give effect to Noven’s 49% interest in Novogyne (Noven’s joint venture with Novartis, the net revenues of which are not included in Noven’s financial results), Noven’s revenues, for benchmarking purposes, are combined with 49% of the revenues of Novogyne. These peer companies’ revenues ranged from 50% to 200% of Noven’s revenues as determined above. Companies for which information is no longer available (due primarily to acquisitions) are shown with an asterisk in the table above and have been removed from the list of peer companies. Since not all compensation data is made publicly available by the companies listed in the table, Noven also uses published and private pay surveys for analysis of executive pay at comparably-sized pharmaceutical companies in the benchmarking process. While the Compensation Committee relied on the data points produced in these surveys, it did not predicate its compensation decisions on the specific companies that participated in such surveys. In this report, these companies and those listed in the table above are collectively referred to as Noven’s “Peer Companies.”

Base Salary

          Noven targets base salaries for its executive officers generally based on the median base salary of similarly situated officers at the Peer Companies. Salary levels are typically determined annually at the Compensation Committee’s November meeting, as well as upon

appointment, promotion or other change in job responsibilities. Each executive officer’s base salary is determined by the Compensation Committee, in consultation with our CEO, based on the executive officer’s particular qualifications, skills and experience, the expected roles and responsibilities of the position, market data prepared by PM&P and the level of compensation required to attract and retain the executive officer. In determining 2009 base salaries for the named executive officers, the Compensation Committee reviewed the results of seven salary budget surveys conducted by third-party compensation sources indicating that the surveyed companies expected to increase executive salaries by 3.9% to 4.1% in 2009.

          Based on the foregoing, the Compensation Committee has approved the following base salaries, effective January 1, 2009, for the current named executive officers:

	•		Peter Brandt — Mr. Brandt’s base salary for 2008 was determined as a result of the arms-length negotiation of his employment agreement, dated April 29, 2008, the material terms of which are described beginning on page 27 below. The factors that the Compensation Committee considered in its decision to approve Mr. Brandt’s 2008 base salary (as well as the other components of his compensation) included an assessment of his qualifications, skills and experience, market data and the level of compensation required to attract and retain Mr. Brandt. In November 2008, the Compensation Committee awarded Mr. Brandt a 5% merit increase in recognition of his performance toward achievement of a range of pre-defined objectives addressing issues faced by Noven in 2008, which merit increase was pro-rated based on the number of days Mr. Brandt was employed by Noven in 2008. Accordingly, the Compensation Committee granted Mr. Brandt a 2009 base salary increase of 3.3% to $674,375.
	•		Jeffrey F. Eisenberg — In November 2008, the Compensation Committee granted Mr. Eisenberg a 2009 base salary increase of 4.1% to $380,000 to recognize his efforts in advancing Noven’s strategic objectives.
	•		Michael D. Price — In November 2008, the Compensation Committee increased Mr. Price’s 2009 base salary by $39,000, or 13.9% to $325,000, which is composed of a $25,000 adjustment to align his base salary with the median salary for chief financial officers based on the Peer Company data and a $14,000 or 4.5% merit increase to recognize his performance in 2008.
	•		Richard P. Gilbert — In November 2008, the Compensation Committee granted Mr. Gilbert a 2009 base salary increase of 5.0% to $273,000 to recognize his 2008 performance.
	•		Steven M. Dinh — Mr. Dinh’s 2008 base salary was determined upon joining Noven as a result of the arms-length negotiation in connection with Mr. Dinh’s recruitment and offer of employment. In November 2008, the Compensation Committee awarded Mr. Dinh a 4.0% merit increase in recognition of his performance in 2008, which merit increase was pro-rated based on the number of days Mr. Dinh was employed by Noven in 2008. Accordingly, the Compensation Committee granted Mr. Dinh a 2009 base salary increase of 2.3% to $312,117.
	•		Joel S. Lippman, M.D. — Dr. Lippman’s 2008 base salary was determined upon joining Noven as a result of the arms-length

negotiation in connection with Dr. Lippman’s recruitment and offer of employment. In November 2008, the Compensation Committee awarded Dr. Lippman a 4.3% merit increase in recognition of his performance in 2008, which merit increase was pro-rated based on the number of days Dr. Lippman was employed by Noven in 2008. Accordingly, the Compensation Committee granted Dr. Lippman a 2009 base salary increase of 2.2% to $332,000.

Annual Incentive Plan

          Noven’s annual incentive plan, or AIP, is intended to motivate executives by recognizing and rewarding annual corporate and individual performance. The Compensation Committee believes that performance-based annual incentives, in the form of cash incentives, should represent a meaningful component of Noven’s executive compensation program.

          While the basic framework of the AIP has not changed significantly over the past several years, the Compensation Committee annually reevaluates the parameters of the program based on Noven’s then-current circumstances, as well as the performance and/or goals that the Compensation Committee deems critical for the success of the Company.

          All of the named executive officers other than Mr. Brandt participated in the 2008 AIP. As discussed below, the 2008 annual incentive for Mr. Brandt, who joined Noven in April 2008, was determined under a separate plan—the 2008 CEO Incentive Plan—designed to qualify as “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

Determination of Awards under the 2008 AIP for the NEOs other than Mr. Brandt

          The determination of awards under the 2008 AIP for the named executive officers was based on two primary factors:

	•		Financial Performance. Noven’s 2008 financial performance compared to pre-established financial measures.
	•		Individual Performance Objectives. An executive officer’s performance in meeting his or her “individual performance objectives.”

          Under the 2008 AIP, Noven’s financial performance established the size of a potential award. To the extent that Noven’s actual financial performance was equal to, greater than or less than Noven’s financial performance targets described below, then an executive’s annual incentive award would be equal to, greater than or less than his or her target award. However, one-half of this award (as adjusted for financial performance) was subject to the executive officer’s performance in achieving his or her individual performance objectives. An executive officer’s failure to achieve his or her individual performance objectives at 100% resulted in a corresponding reduction in one-half of the executive officer’s award under the 2008 AIP.

          The Compensation Committee selected target incentive bonus awards as fixed percentages of base salaries for the

named executive officers. The 2008 target AIP awards were set between 45% and 50% of base salary for each of the named executive officers participating in the 2008 AIP. In determining the target AIP awards for the named executive officers, the Compensation Committee considered market data, including the 2007 benchmarking study, which indicated that these target awards approximated the median for similarly situated executives at the Peer Companies.

          The financial measures selected by the Compensation Committee for the 2008 AIP were:

	•		Revenues. Total combined net revenues of Noven and Novogyne adjusted to exclude Noven’s total product revenues from sales to Novogyne.
	•		Pre-Tax Income. Noven’s pre-tax income adjusted to exclude clinical expenses.

For the revenue measure, the Compensation Committee added Novogyne revenues to the calculation because Noven is responsible for the sales and marketing function of the joint venture. Each measure was weighted equally for purposes of AIP calculations.

          The revenue and pre-tax income target matrix approved for the 2008 AIP are summarized as follows:

		Revenue								Pre-Tax Income
		Performance								Performance
		Achieved				Award				Achieved				Award
		(% of Target)				(% of Target)				(% of Target)				(% of Target)
			< 85	%			0	%			< 80	%			0	%
			85	%			50	%			80	%			50	%
			92.5	%			75	%			90	%			75	%
			100	%			100	%			100	%			100	%
			120	%			182	%			120	%			120	%
			141	%			265	%			140	%			180	%

          The Compensation Committee established the financial performance targets for the 2008 AIP in the first quarter of 2008 based on its assessment of the expected difficulty of management achieving the performance targets in 2008. There was no limit on the maximum percentage payout for either the pre-tax income or revenue measures.

          Revenue and pre-tax income in 2008 (as adjusted in the manner described above) were $248.1 million and $35.5 million, respectively. Based on Noven’s reported financial results, Noven’s adjusted financial performance for 2008 would have resulted in an award equal to 108.7% of an individual’s target award under the 2008 AIP, calculated as follows:

		Revenues								Pre-Tax Income
		Performance				Award				Performance				Award
		Achieved				(% of Target)				Achieved				(% of Target)
			103.8	%			110.1	%			107.2	%			107.2	%

          Consistent with prior years, the 2008 AIP gave the Compensation Committee the discretion to increase or decrease performance goals

and target awards to reflect changed circumstances. For the 2008 AIP, the Compensation Committee reviewed certain non-recurring and unusual events affecting Noven’s 2008 financial performance. Based on this review, the Compensation Committee excluded several items from the calculation of pre-tax income under the 2008 AIP that were not contemplated when the 2008 AIP was adopted in the first quarter of the year. The net effect of excluding such items resulted in the reduction of the financial performance portion of the award from 108.7% to 104.1%. Following further review of Noven’s performance in 2008 and upon the recommendation of Noven’s management, the Compensation Committee decided to further exercise its negative discretion under the 2008 AIP and reduced the financial performance portion of the award to 100%.

          For the non-financial portion of the award under the 2008 AIP, each of the named executive officer’s performance was assessed in meeting his or her individual performance objectives based on a combination of objective standards and subjective assessments of performance. Participating named executive officers achieved their individual performance objectives and the portion of their incentive awards under the 2008 AIP applicable to individual performance objectives were accordingly paid at target.

          The amounts paid to each of the named executive officers participating in the 2008 AIP are set forth in the column titled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 31.

Determination of 2008 Bonus for Mr. Brandt

          As noted above, Mr. Brandt’s bonus for 2008 was determined under the 2008 CEO Incentive Plan. Mr. Brandt joined Noven in April 2008 and, in order to comply with Section 162(m) of the Code, the financial measures (revenues and pre-tax income calculated in the same manner as the 2008 AIP) under the 2008 CEO Incentive Plan are based on Noven’s financial results for the nine months ended December 31, 2008. The 2008 CEO Incentive Plan allocates 70% of his award based on Noven’s financial performance and 30% on individual performance objectives. The other terms and conditions of the 2008 CEO Incentive Plan are substantially similar to the terms of the 2008 AIP applicable to the other named executive officers. In accordance with the terms of Mr. Brandt’s employment agreement (see discussion below), Mr. Brandt’s target award under the 2008 CEO Incentive Plan was 75% of his base salary based on the number of days Mr. Brandt was employed by Noven in 2008.

          Based on Noven’s reported financial results, Noven’s adjusted financial performance for the nine months ended December 31, 2008 would have resulted in an award equal to 114.3% of Mr. Brandt’s target award under the 2008 CEO Incentive Plan, calculated as follows:

		Revenues								Pre-Tax Income
		Performance				Award				Performance				Award
		Achieved				(% of Target)				Achieved				(% of Target)
			105.8	%			115.5	%			113.1	%			113.1	%

          The Compensation Committee exercised its discretion under the 2008 CEO Incentive Plan and reduced the financial performance portion of the award to 100% in the same manner as described above for the 2008 AIP for the other named executive officers. The rationale for this

decision was that the Compensation Committee believed that the assessment of financial performance under the two annual incentive plans should be the same. The Compensation Committee determined that Mr. Brandt achieved all of his individual performance objectives for 2008. The amounts paid to Mr. Brandt under the 2008 CEO Incentive Plan are set forth in the column titled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 31.

          In recognition of Mr. Brandt’s performance in 2008, the Compensation Committee determined in February 2009 that Mr. Brandt should receive a supplemental incentive payment of $218,750. In lieu of a cash award, the Compensation Committee decided to pay such award in the form of an immediately exercisable SSAR because it is more performance-based than a cash award. Accordingly, Mr. Brandt was granted a SSAR on February 4, 2009 to purchase 62,712 shares of common stock at an exercise price of $9.47 per share, the closing price on the date of grant. Among other reasons, the Compensation Committee selected a SSARs award instead of a cash award in order for this award to qualify as “performance-based compensation” under Section 162(m) of the Code.

2009 Annual Incentive Plan

          The Compensation Committee has approved an annual incentive plan for 2009. The financial measures selected by the Compensation Committee for the 2009 AIP are:

	•		Revenues. Total combined net revenues of Noven and Novogyne adjusted to exclude Noven’s total product revenues from sales to Novogyne.
	•		Pre-Tax Income. Noven’s pre-tax income. The Compensation Committee decided to treat clinical expenses in the same manner as all other expenses and accordingly, clinical expenses are not excluded from the calculation of pre-tax income under the 2009 AIP.

          The percentage amounts of the performance matrix (award amounts based on performance) for the 2009 AIP were adjusted based on the Compensation Committee’s assessment of the difficulty in achieving the 2009 financial targets. Based on the potential for competitive harm to Noven, the specific dollar values of the financial targets under the 2009 AIP are not disclosed. Although no assurance can be given, the Compensation Committee believes that it is reasonably likely (although not certain or assured) that Noven will meet the minimum level of performance to trigger some incentive plan payment (i.e., at levels greater than or equal to 50% of target) under the 2009 AIP. The Compensation Committee further believes that achievement of the 2009 AIP’s financial target performance criteria is substantially uncertain and represents an appropriate challenge for Noven and its executive management team.

          The 2009 individual targets for cash incentives as a percentage of base salary for the named executive officers are unchanged from the 2008 levels discussed above. The 2009 AIP allocates 60% of an executive’s 2009 AIP award based on Noven’s financial performance and 40% based on individual performance objectives. In order to incentivize individual performance independent of Noven’s financial performance, an executive may receive an award based on individual performance under the 2009 AIP whether or not minimum corporate financial performance thresholds have been met.

Long-Term Incentive Pay

          Long-term incentive pay in the form of equity grants is intended to relate a significant portion of compensation for the named executive officers to long-term stock price appreciation realized by Noven’s stockholders.

          Starting in 2006, the Compensation Committee began granting SSARs in lieu of stock options. A SSAR entitles the holder to receive upon exercise the shares of common stock, on a net after-tax basis, equal in value to the amount by which the underlying stock has appreciated since the right was granted. While SSARs offer participants a similar economic benefit as stock options, the Compensation Committee believes SSARs provide additional benefits to Noven, including reduced share dilution over the long term.

2008 Annual Grant of SSARs

          The determination of annual equity grants to the named executive officers in 2008 was made with reference to ranges established as part of the 2007 executive compensation study conducted by PM&P, the executive’s level of responsibility and the recommendation at the time of Mr. Brandt (other than for his award). The Compensation Committee targeted long-term incentive grants at the market 75^th percentile based on Noven’s philosophy of having significant incentives in place that provide value based on increases in shareholder value. The combination of market median cash compensation (salary and annual incentive opportunities) and 75^th percentile equity opportunities provides total compensation between the median and market 75^th percentiles.

          The following table shows the grant date fair value (using the Black-Scholes pricing model) and the number of shares of common stock underlying the SSARs granted to the named executive officers as part of the 2008 annual grant:

		Grant Date				Number
Executive		Fair Value				of Shares
Peter Brandt*		$	985,703				188,471
Jeffrey F. Eisenberg		$	375,000				71,702
Michael D. Price		$	350,000				66,922
Richard P. Gilbert		$	350,000				66,922
Steven M. Dinh*		$	201,833				39,038
Joel S. Lippman, M.D.*		$	175,000				33,461

          Under the 1999 Plan, the exercise price of SSARs (and stock options) may not be less than the closing price of Noven’s common stock on the date of grant.

Employment Agreement — Mr. Brandt

          Noven’s insider trading policy prohibits hedging or monetization transactions, such as zero-cost collars and forward sale contracts. Noven’s policies do not include share-retention or equity ownership requirements for its executive officers. A 2007 review of the Peer Companies indicated that only four of the 21 Peer Companies had share-retention or equity ownership guidelines for executive officers. Nonetheless, the Compensation Committee continues to monitor evolving practices in this area and intends to review whether to implement share-retention guidelines as part of the 2009 compensation study to be conducted by PM&P.

          Noven’s current form of equity award agreements contains clawback provisions. Under these provisions, executives who violate any non-competition, confidentiality or other obligation owed to Noven will forfeit any outstanding award as of the date of the violation and will have to return any gains realized in the twelve months prior to such violation. These provisions serve to protect Noven’s intellectual property and business enterprise and help ensure that executives act in the best interests of Noven and its stockholders.

2008 New Hire Equity Grants

          In order to attract and incentivize new hires, initial equity grants are typically larger than annual grants. In addition to the annual grant discussed above, Messrs. Brandt and Dinh and Dr. Lippman received the following equity awards in 2008 in connection with their respective appointments:

		SSARs								Restricted Stock
		Grant Date				Number				Grant Date				Number
Executive		Fair Value				of Shares				Fair Value				of Shares
Peter Brandt		$	1,300,000				311,529			$	2,275,000				250,000
Steven M. Dinh		$	300,000				53,107				n/a				n/a
Joel S. Lippman, M.D.		$	400,000				78,520				n/a				n/a

          A discussion of the equity awards granted to Mr. Brandt upon joining Noven is included below in the discussion of his employment agreement. The SSARs granted to Mr. Dinh and Dr. Lippman upon joining Noven were determined as a result of the arms-length negotiation between Noven and each of the executive officers in connection with each such executive officer’s recruitment and offer of employment.

Benefits

          Benefits for the executive officers are established based upon an assessment of competitive market factors and, to a lesser extent, a determination of what is needed to attract and retain talent. Except as described herein, executive officers are generally entitled to the same health, welfare and retirement benefits provided to all of our employees. In addition, Noven reimburses the following costs for executive officers: airline club membership, certain financial planning services, executive physical examinations and communication equipment and monthly usage fees.

          On April 29, 2008, Noven entered into an employment agreement with Mr. Brandt as President and Chief Executive Officer. The initial two-year term of the agreement expires on April 28, 2010 and will continue for consecutive one-year terms unless the agreement is terminated by either party under certain conditions. Mr. Brandt’s annual base salary under the employment agreement was set at $650,000 for 2008, subject to further increases at the discretion of the Board. Mr. Brandt’s annual target incentive bonus under Noven’s annual incentive plan during the term will be at least 75% of his base salary. Under his agreement, Mr. Brandt receives a non-accountable automobile expense allowance of $850 per month and is entitled to participate in all incentive, savings and retirement plans, as well as welfare benefit plans that are available to Noven’s executive officers.

          In connection with his employment agreement, Mr. Brandt was granted the equity awards described above under the caption “2008 New Hire Equity Grants.” As with Mr. Dinh and Dr. Lippman, the new hire equity grants to Mr. Brandt were the result of an arms-length negotiation between Noven and Mr. Brandt in connection with Mr. Brandt’s recruitment and offer of employment. For Mr. Brandt, the Compensation Committee selected a combination of SSARs, time-vested restricted stock and performance-based restricted stock for Mr. Brandt’s new hire equity grants in order to meet several incentive objectives.

	•		Mr. Brandt was granted SSARs to acquire 311,529 shares of common stock, which vest in four annual installments over four years. The Compensation Committee included SSARs in Mr. Brandt’s new hire equity package in order to align his interests with those of Noven’s stockholders.
	•		Mr. Brandt was granted 100,000 shares of restricted stock, of which 50,000 shares were immediately vested and the remaining 50,000 shares vest annually in three annual installments over three years. The Compensation Committee included such restricted stock in Mr. Brandt’s new hire equity package because of its enhanced retention value.
	•		Mr. Brandt was also granted 150,000 shares of performance-based restricted stock that vest as follows: (i) 50,000 shares upon Noven attaining annual pre-tax income over $50 million; (ii) 50,000 shares upon Noven attaining annual pre-tax income over $75 million; and (iii) 50,000 shares upon Noven attaining annual pre-tax income over $100 million. The Compensation Committee selected these performance goals based on its belief that achievement of these goals would result in significant value to Noven and its stockholders. In 2008, Noven’s pre-tax income was $32.8 million. These 150,000 shares of restricted stock are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code.

          If, prior to a “change in control”, the employment agreement is terminated by Noven “without cause” or by Mr. Brandt for “good reason” (as such terms are defined in the employment agreement), then Mr. Brandt is entitled to: (i) a severance payment in an amount equal to 18 months of his then-base salary, payable at such time as his salary would have otherwise been payable; (ii) a pro-rated award (based on the date of termination) under Noven’s annual incentive plan based on his target incentive percentage; and (iii) immediate vesting of the SSARs awarded to him on April 29, 2008 and up to a total of 50,000 shares of the restricted stock that vests on the first, second and third

anniversary of the employment agreement. If Noven declines to renew the employment agreement, Mr. Brandt is not entitled to a cash severance payment, but would be entitled to receive the benefits described in (ii) and (iii) of this paragraph.

          If, following a “change of control”, Mr. Brandt is terminated for any reason other than death, disability or for “cause”, or he terminates the employment agreement for “good reason” (as defined in the employment agreement), or if Noven declines to renew the employment agreement for at least the two-year period following the change of control, then Mr. Brandt is entitled to a severance payment equal to two times his “annual base salary” and “highest annual bonus” (as defined in the employment agreement). The employment agreement also provides that he is entitled to continue to participate in Noven’s welfare benefit plans for the full two-year period following the change of control. In the event that any payments made in connection with a change of control would be subjected to the excise tax imposed by Section 4999 of the Code, Noven would be required to “gross-up” Mr. Brandt’s compensation for all federal, state and local income and excise taxes and any penalties and interest thereon.

Compensation to Mr. Eisenberg as Interim Chief Executive Officer

          In January 2008, Noven appointed Mr. Eisenberg as Executive Vice President and Interim Chief Executive Officer. Prior to then, Mr. Eisenberg had been serving as Senior Vice President - Strategic Alliances. Since the appointment of Mr. Brandt as Noven’s Chief Executive Officer in April 2008, Mr. Eisenberg has served as Noven’s Executive Vice President. In connection with his appointment as Interim Chief Executive Officer, Noven entered into a letter agreement with Mr. Eisenberg which provided him:

	•		an additional $33,334 per month in base salary for the period from January 2, 2008 until April 29, 2008, the date of the appointment of Mr. Brandt as the permanent Chief Executive Officer; and
	•		a restricted stock award of 7,342 shares of Noven common stock, which had a market value of $100,000 on the date of grant (based on a per share grant value of $13.62), and which vests over a two year period in eight quarterly installments beginning on March 31, 2008.

          Mr. Eisenberg’s cash compensation (base salary as increased by the amounts noted above plus his full year annual incentive opportunity) was designed to provide him, for his services as Interim Chief Executive Officer, with a total cash compensation package similar to the market median for a Peer Company chief executive officer, as determined in the market comparison performed during 2007 by PM&P. The Compensation Committee decided to include a restricted stock grant to provide a retention incentive for Mr. Eisenberg in the event that he did not become the permanent Chief Executive Officer, as his continued services as Executive Vice President were considered to be critical to Noven’s future success. The Compensation Committee decided on the amount of the restricted stock award based on the assumption that Mr. Eisenberg’s term as Interim Chief Executive Officer would be less than six months and that Mr. Eisenberg should receive an award that constitutes a significant percentage of his regular grant of SSARs. The Compensation Committee chose restricted stock as the instrument because it provides a greater retention incentive than do SSARs.

          The letter agreement with Mr. Eisenberg also provides for severance in the event that, prior to December 31, 2009, he is terminated without “cause” or resigns for “good reason” (as such terms are defined in the letter agreement), in which event he would receive (i) severance equal to one year of his then-current salary, (ii) an amount equal to his target award under the AIP in effect during the applicable fiscal year of the date of termination or resignation, (iii) immediate vesting of the restricted stock outstanding at the date of such termination or resignation, and (iv) an extension of the exercise period for then vested options or SSARs from 90 days to 12 months after the date of such termination or resignation. The severance benefits resulted from the negotiation of Mr. Eisenberg’s letter agreement and were deemed appropriate by the Compensation Committee.

Post-Employment Payments to Mr. Strauss

          Effective January 2, 2008, Robert C. Strauss retired from his roles as the President, Chief Executive Officer, director and Chairman of Noven. In connection with his retirement, Noven and Mr. Strauss entered into a separation agreement, which provided for certain separation payments, equity grants and the extension of certain vesting periods for stock options and SSARs vested as of the date of his separation from Noven. All of these amounts were recognized and accrued in 2007 for financial reporting purposes and are reported herein in the Summary Compensation Table for 2007.

Change of Control Arrangements

          Noven has separately entered into change of control employment agreements with its executive officers (other than Mr. Brandt). These agreements, which are more fully described beginning on page 42 of this Proxy Statement, become effective if a change of control occurs during the three-year period that commences on the execution of the agreement. The change of control employment agreements are intended to further the interests of Noven’s stockholders by providing for continuity of management in the event of a change of control of Noven. In November 2008, the Compensation Committee renewed these agreements for the named executive officers, which had the effect of extending the three-year term of those agreements to November 2011. The renewed agreements also contain amendments designed to comply with Section 409A of the Code.

          In the event that any payments made in connection with a change of control under the change of control employment agreements for the named executive officers would be subject to the excise tax imposed by Section 4999 of the Code, Noven would be required to “gross-up” the officer’s compensation for all federal, state and local income and excise taxes and any penalties and interest thereon.

          Awards (including SSARs and stock options) granted under the 1999 Plan vest immediately upon a “change of control”. The definition of a “change of control” under these awards is substantially the same as the definition of “change of control” described on page 43 with respect to the change of control employment agreements.

Internal Revenue Code Limits on Deductibility of Compensation

          Section 162(m) of the Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s chief executive officer and three other most highly compensated executive officers as of the end of any fiscal year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.

          The Compensation Committee believes that it is generally in Noven’s best interest to attempt to structure performance-based compensation, including stock option/SSARs grants or performance-based restricted stock or restricted stock unit awards and annual incentive awards, to executive officers who may be subject to Section 162(m) in a manner that satisfies the statute’s requirements. However, the Compensation Committee recognizes the need to retain flexibility to make compensation decisions that may not meet Section 162(m) standards when necessary to enable the Company to meet its overall objectives, even if the Company may not deduct all of the compensation for tax purposes. Accordingly, the Compensation Committee may approve compensation arrangements for certain officers that are not fully deductible. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding Noven’s efforts, that compensation intended by the Compensation Committee to satisfy the requirements for deductibility under Section 162(m) will in fact do so. All of the executive compensation payments in 2008 were deductible under Section 162(m).

Compensation Committee Report

Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate other of our filings, including this Proxy Statement, in whole or in part, the Report of the Compensation Committee below shall not be incorporated by reference into any such filings. This report shall also not be deemed to be “soliciting material,” or to have been “filed” with the Securities and Exchange Commission or subject to Regulation 14A under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 thereof.

          The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee
John G. Clarkson, M.D., Chairperson
Pedro P. Granadillo
Robert G. Savage

Summary Compensation Table

          The table below and the accompanying footnotes include information regarding 2008, 2007 and 2006 compensation for each of the named executive officers. Other tables in this Proxy Statement provide additional detail on specific types of compensation.

																										Change in
																										Pension
																						Non-				Value and
																						Equity				Non-
																						Incentive				Qualified
																						Plan				Deferred				All Other
														Stock				Option				Compen-				Compen-				Compen-
Name and Principal										Bonus				Awards				Awards				sation				sation				sation
Position		Year				Salary				(1)				(2)(3)				(2) (3)				(4)				Earnings				(5)				Total
Peter Brandt			2008			$	422,500			$	0			$	863,446			$	416,092			$	365,625			$	0			$	15,538			$	2,083,201
President & CEO			2007				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Robert C. Strauss (6)			2008				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Former President, CEO & Chairman			2007				611,251				0				681,000				1,214,492				334,813				0				1,103,212				3,944,768
			2006				587,741				66,121				0				554,231				245,129				0				21,857				1,475,079
Jeffrey F. Eisenberg			2008				483,524				0				50,000				290,354				182,500				0				22,217				1,028,595
Executive Vice President &			2007				314,810				0				0				265,577				151,051				0				21,252				752,740
Former Interim CEO			2006				302,702				24,902				0				223,116				92,319				0				20,758				663,797
Michael D. Price			2008				286,000				0				0				107,843				128,700				0				48,517				571,060
Vice President & Chief			2007				27,500				10,000				N/A				12,500				0				0				11,772				51,772
Financial Officer			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Richard P. Gilbert (7)			2008				248,777				0				0				162,158				117,000				0				20,725				548,660
Vice President — Operations			2007				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Steven M. Dinh (8)			2008				167,750				15,000				0				40,011				80,058				0				80,020				382,839
Vice President & Chief			2007				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Scientific Officer			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Joel S. Lippman, M.D. (8)			2008				143,750				50,000				0				42,068				73,125				0				10,257				319,200
Vice President — Clinical			2007				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Development & Chief			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Medical Officer
Juan A. Mantelle (9)			2008				287,080				0				0				237,541				114,832				0				19,769				659,222
Vice President & Chief			2007				278,718				0				0				247,974				111,753				0				19,173				657,618
Technical Officer			2006				267,998				20,917				0				210,144				77,543				0				18,407				595,009

						401(k)
						Matching				Auto				Life				Other
Name		Relocation				Contributions				Allowance				Insurance				Perquisites				Total
P. Brandt		$	0			$	2,776			$	6,669			$	602			$	5,491			$	15,538
R. Strauss			0				0				0				0				0				0
J. Eisenberg			0				7,208				7,200				517				7,292				22,217
M. Price			31,705				6,930				7,200				440				2,242				48,517
R. Gilbert			0				7,352				7,200				368				5,805				20,725
S. Dinh			70,397				2,128				3,877				216				3,402				80,020
J. Lippman			0				1,511				3,185				460				5,101				10,257
J. Mantelle			0				6,746				7,200				408				5,415				19,769

Grants of Plan-Based Awards in 2008

																						All Other
																						Stock Awards
																						and
																						Option/SSAR				Exercise
																						Awards:				or Base				Grant Date
				Estimated Possible Payouts						Estimated Future Payouts												Number of				Price of				Fair Value of
				Under Non-Equity Incentive						Under Equity Incentive												Securities				Option/				Stock and
				Plan Awards (1)						Plan Awards												Underlying				SSAR				Option/
								Maxi-		Thresh-								Maxi-				Options/				Awards				SSAR
		Grant		Threshold		Target		mum		old				Target				mum				SSARs (2)				(3)				Awards (4)
Name		Date		($)		($)		($)		(#)				(#)				(#)				(#)				($/Sh)				($)
Peter Brandt (5)		04/29/08	(6)																				250,000				N/A			$	2,275,000
		04/29/08		$ 182,813		$365,625		N/A			0				0				0				311,529			$	9.10				1,300,000
		11/21/08																					188,471				11.09				985,703
		02/04/09																					62,712				9.47				218,750
Robert C. Strauss		N/A		N/A		N/A		N/A			0				0				0				0				N/A				N/A
Jeffrey F. Eisenberg		01/02/08	(6)	91,250		182,500		N/A			0				0				0				7,342				N/A				100,000
		11/18/08																					71,702				11.09				375,000
Michael D. Price		11/18/08		64,350		128,700		N/A			0				0				0				66,922				11.09				350,000
Richard P. Gilbert		11/18/08		58,500		117,000		N/A			0				0				0				66,922				11.09				350,000
Steven M. Dinh (5)		06/04/08		40,029		80,058		N/A			0				0				0				53,107				11.84				300,000
		11/18/08																					39,038				11.09				204,167
Joel S. Lippman (5)		07/14/08		36,563		73,125		N/A			0				0				0				78,520				10.86				400,000
		11/18/08																					33,461				11.09				175,000
Juan A. Mantelle		11/18/08		57,416		114,832		N/A			0				0				0				38,241				11.09				200,000

Outstanding Equity Awards at 2008 Year-End

		Option/SSAR Awards																Stock Awards
																										Equity
																										Incentive				Equity
																										Plan				Incentive
																										Awards				Plan Awards
																										Number of				Market or
		Number of				Number of																Market				Unearned				Payout Value
		Securities				Securities												Number of				Value of				Shares,				of Unearned
		Underlying				Underlying												Shares or				Shares or				Units or				Shares, Units
		Unexcercised				Unexercised				Option/								Units of				Units of				Other				or Other
		Options/				Options/ SSARs				SSAR				Options/				Stock That				Stock That				Rights That				Rights That
		SSARs (#)				(#)				Exercise				SSAR				Have Not				Have Not				Have Not				Have Not
		Exercisable				Unexercisable				Price				Expiration				Vested				Vested				Vested				Vested
Name		(1)				(1)				($)				Date				(#)				($)				(#)				($)
Peter Brandt (3)																			50,000			$	550,000				150,000			$	1,650,000
			0				188,471			$	11.09				11/20/2015
			0				311,529			$	9.10				4/28/2015
Robert C. Strauss (4)			20,360				0			$	22.83				12/31/2009				0			$	0				50,000			$	550,000
			53,704				0			$	13.68				12/31/2009
			100,000				0			$	22.60				12/31/2009
			80,000				0			$	10.45				12/31/2009
			120,000				0			$	13.11				9/4/2009
Jeffrey F. Eisenberg (5)			0				71,702			$	11.09				11/17/2015				3,671			$	40,381				0			$	0
			13,040				39,121			$	14.54				11/12/2014
			11,764				11,763			$	22.83				11/13/2013
			23,148				7,716	(2)		$	13.68				11/14/2012
			50,000				0			$	22.60				11/10/2011
			24,000				0			$	10.45				11/4/2010
			19,099				0			$	13.11				9/4/2009
Michael D. Price			0				66,922			$	11.09				11/17/2015				0			$	0				0			$	0
			15,625				46,875			$	13.93				11/18/2014
Richard P. Gilbert			0				66,922			$	11.09				11/17/2015				0			$	0				0			$	0
			7,452				22,354			$	14.54				11/12/2014
			9,954				9,954			$	22.83				11/13/2013
			17,393				5,798	(2)		$	13.68				11/14/2012
			30,000				0			$	16.35				12/5/2011
Steven M. Dinh (6)			0				39,038			$	11.09				11/17/2015				0			$	0				0			$	0
			0				53,107			$	11.84				6/3/2015
Joel S. Lippman (6)			0				33,461			$	11.09				11/17/2015				0			$	0				0			$	0
			0				78,520			$	10.86				7/13/2015
Juan A. Mantelle			0				38,241			$	11.09				11/17/2015				0			$	0				0			$	0
			7,452				22,354			$	14.54				11/12/2014
			11,764				11,763			$	22.83				11/13/2013
			15,432				7,716	(2)		$	13.68				11/14/2012
			50,000				0			$	22.60				11/10/2011
			20,001				0			$	10.45				11/4/2010
			10,000				0			$	13.11				9/4/2009