Biovail says it will keep off-patent products, use revenues to accelerate R&D in other programs

By Jennifer Lanning Drey

Eugene, Ore., Aug. 10 - Biovail Corp. said it will retain its off-patent branded pharmaceutical products as part of its strategy to strengthen company performance in anticipation of the launch of a generic form of Wellbutrin XL.

The company had previously announced plans to spin-off the division that turns out the products to shareholders, either as a dividend or return in capital.

"Revenues from these off-patent branded pharmaceutical products continue to provide significant cash flow that the company may deploy to accelerate a number of research and development programs as well as a number of research and development opportunities," said Dr. Douglas Squires, Biovail's chief executive officer, during a company conference call held Thursday.

Biovail will use a portion of the funds to start the phase 3 clinical program for its tramadol/NSAID combination product by the end of the year, he said.

"At this time, Biovail is completing an extensive review of its various pipeline programs with the goal to accelerate those of most value and to reassess or terminate those of lesser value," said Squires.

Biovail is also exploring opportunities to partner its products earlier in their development cycles, he said.

"Partnering with other companies should enable the company to increase its number of ongoing programs and accelerate a number of programs that are currently under development. It may also allow us to manage our overall R&D spending more efficiently going forward," Squires said.

The company increased its focus on strengthening its pipeline after its patent-infringement case against Anchen Pharmaceutical Inc. was denied last week.

Anchen has filed an abbreviated New Drug Application for bioequivalent of Wellbutrin XL.

Biovail's senior legal council, Kenneth Cancellara, said Biovail will likely file a motion next week for reconsideration on the basis that the court failed to consider certain evidence that established the material issue of facts regarding Anchen's alleged infringement.

"Biovail continues to assess the impact that the court's ruling may have on the timing of Anchen's launch of a generic version of Wellbutrin XL," Cancellara said during Thursday's call.

Biovail does not currently believe Anchen will launch a generic product in 2006, Squires said.

EPS to 50c from 2c

Biovail reported second quarter GAAP net income of $80.6 million, or $0.50 per diluted share, on revenues of $252.8 million, according to a company news release.

GAAP net income was up from $3.7 million, or $0.02 per diluted share, on revenues of $216.2 million in the second quarter of 2005, according to the release.

The drastic upswing was due in part to that fact that Biovail's second quarter 2005 GAAP net income was negatively affected by restructuring costs, a write-down of assets primarily associated with the sale of Teveten and Teveten HCT and a $4.9 million write-off of Cardizem and Teveten inventories, the company said.

Biovail also said the second quarter 2006 benefited from the launch of two new products-Ultram ER and Zoladex.

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