Biovail's future lies in shareholders' verdict

Tue Jun 24, 2008 12:12pm EDT
 
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By Scott Anderson

TORONTO (Reuters) - Biovail Corp's shareholders will know later this week whether they have plotted a course that could dramatically change the future of Canada's biggest publicly traded drugmaker.

The shareholders, who have seen the stock plunge 45 percent in the past four years, could vote for a new slate of directors floated by founder Eugene Melnyk and headed by a former chief executive, who promise a return to the former glory days. Or they may stay the course with the incumbent slate and a radical shift in the company's drugmaking strategy.

A decision is expected to be announced at an annual meeting on Wednesday, though the results may come ahead of that.

Proxy battles have become more frequent in recent years, but few have seen a founder so passionate about ousting the present board as Melnyk, who is also the biggest shareholder with a 12 percent stake.

Melnyk, who founded the company almost 20 years ago and held numerous posts before stepping down last year, decided to oppose the board, he says, after losing confidence in Biovail's corporate strategy and the board's abilities earlier this year.

In Melnyk's plan, a development committee headed by Bruce Brydon - who was CEO from 1995 to 2001 - will emphasize the drug pipeline, including a return to so-called "difficult to manufacture" generic pharmaceuticals and acquiring more products and technologies.

Meanwhile, the present board under newly appointed chief executive Bill Wells stands behind its strategic changes unveiled last month, including shutting down operations in Puerto Rico and shifting to new treatments for disorders of the central nervous system.

Earlier this month, CEO Bill Wells said the dissident plan was "out of touch" with the changing pharmaceutical industry, and was simply a ploy for Melnyk to make the most of his 12-percent stake in the company.   Continued...

 
<p>The U.S. and Canadian flags fly in front of the futuristic looking Biovail Corporation Head Office in Mississauaga, a Toronto suburb, March 4, 2005. Biovail Corp's shareholders will know later this week whether they have plotted a course that could dramatically change the future of Canada's biggest publicly traded drugmaker. REUTERS/J.P. Moczulski JPM</p>