January 9, 2009 / 4:53 PM / 10 years ago

UPDATE 2-Biovail reaches settlement with Canada regulator

* To pay Ontario Securities Commission $5.4 million

* Settlement excludes former executives

* Shares rise 0.7 percent in Toronto (Adds details; in U.S. dollars unless noted)

TORONTO, Jan 9 (Reuters) - Biovail Corp BVF.TO BVF.N said on Friday it has reached a settlement with the Ontario Securities Commission over an investigation into the company’s accounting and disclosure practices dating back to 2001.

Canada’s biggest publicly traded drugmaker said it will pay $5.4 million, including $1.3 million in legal costs, to the OSC, Canada’s main securities regulator.

The settlement does not cover charges against four former executives, including former chief financial officer Ken Howling and founder Eugene Melnyk.

The settlement covered an extensive period between 2001 and March 2004 and includes a Biovail warning of a revenue shortfall following an October 2003 truck accident involving a shipment of Wellbutrin antidepressant, and the company’s disclosure of the impact of that accident on its 2003 results.

Last year, Biovail agreed to pay the U.S. Securities and Exchange Commission $10 million to settle the case.

“This is $5 million less on the balance sheet but, on the other hand, it’s another thing out of the way,” said Maxime Paris, an analyst at CIBC World Markets in Montreal. “It reduces the legal liability overhang.”

The company, under new Chief Executive Bill Wells and CFO Peggy Mulligan, has moved aggressively over the past year to rid itself of costly legal issues and to polish its tarnished reputation.

“They are trying to distance themselves from the old guard and that’s a good thing,” said Paris.

Biovail shares were up 0.7 percent at C$13.08 on the Toronto Stock Exchange.

The company still faces a U.S. class action suit filed in October 2008, which claims it misled investors about the regulatory approval status of its BVF-033 treatment, a salt formulation version of the generic antidepressant Wellbutrin XL.

The suit claims that Biovail did not disclose that while the U.S. Food and Drug Administration required a single-dose study of the effectiveness of BVF-033, the company had in fact submitted a multiple-dose study.

$1=$1.19 Canadian Reporting by Scott Anderson; editing by Rob Wilson

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