August 13, 2008 / 12:31 PM / 10 years ago

UPDATE 3-Biovail sinks to loss, eyes acquisitions

(Adds details, CEO comments. In U.S. dollars unless noted)

By Jennifer Kwan

TORONTO, Aug 13 (Reuters) - The cost of shutting down manufacturing and research plants pushed Canadian drugmaker Biovail Corp BVF.TO into a quarterly loss, but the company said on Wednesday that won’t stop its hunt for acquisitions.

Biovail, Canada’s biggest publicly traded drugmaker, said its second-quarter results were hurt by expenses totaling $84.9 million, or 53 cents a share, including costs linked to the closure of two Puerto Rico manufacturing plants and the pending closure of the Irish research and development facility.

The closures mean about 300 people, or 20 percent of the company’s work force, will lose their jobs.

The cuts are not expected to reduce revenues or impact research spending, Biovail Chief Executive William Wells said on a conference call.

“While we are cutting costs across the organization, it is important to note that we intend to increase our investment in research and development projects, which will remain the lifeblood of the company,” Wells said.

Biovail said it lost $25.3 million, or 16 cents a share, in the second quarter, down from a year-earlier profit of $67.8 million, or 42 cents a share.

It said results were also hurt by costs related to a U.S. Department of Justice investigation into the commercial launch of the blood-pressure drug Cardizem LA in 2003. As well, it logged charges for management changes and the recent proxy battle with the company’s founder, Eugene Melnyk.

Excluding one-time items, Biovail earned 37 cents a share. Analysts, on average, had expected Biovail to earn 35 cents a share, according to Reuters Estimates.

Scotia Capital analyst John Maletic said the results were “nominally in line” with expectations.

Investors will be watching for details on the company’s new strategy, especially how much it might spend on acquisitions and licensing other firms’ products, said Maletic.

In May, Mississauga, Ontario-based Biovail said it would shift its focus to the development of new treatments for disorders of the central nervous system.

Wells said the company is active in developing its business, including looking into Phase II or Phase III compounds that treat Parkinson’s related psychosis, Huntington’s disease and multiple sclerosis fatigue.

“We are also actively evaluating a number of companies as potential acquisition targets,” Wells said. But he said Biovail has not committed to any deals or timetables for takeovers.

Late last week, Biovail shareholders approved the company’s slate of directors, ending a long fight for control of the company with Melnyk, who had objected to the new direction.

Before the shareholder vote, Melnyk had withdrawn his slate of choices for the board and said he would now concentrate on developing his own drug company.

Biovail said its second-quarter revenue fell to $186.1 million from $203 million.

Product revenue fell 8 percent to $175.7 million from $190.8 million, largely due to generic competition for its Wellbutrin XL an anti-depressant treatment, and lower revenues for Cardizem.

Biovail said it expects decreases in product sales for the next several quarters, and doesn’t anticipate meaningful revenue from its development pipeline until 2010-2011.

Shares of Biovail were down 35 Canadian cents at C$10.15 on the Toronto Stock Exchange at midafternoon on Wednesday. ($1=$1.07 Canadian) (Editing by Jeffrey Jones)

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