TORONTO--(BUSINESS WIRE)--May 8, 2008--Biovail Corporation (NYSE/TSX: BVF) today announced its financial results for the three-month period ended March 31, 2008.
To the extent that this news release contains forward-looking statements, investors are cautioned that these are based on the Company's current views, and actual outcomes are not certain. For more information, see the note on forward-looking information following the conference-call details below.
Total revenues for the three months ended March 31, 2008 were $208.5 million, compared with $247.0 million for the first quarter of 2007. First-quarter 2008 net income, in accordance with United States Generally Accepted Accounting Principles (GAAP), was $56.4 million, compared with $93.8 million for the corresponding 2007 period. GAAP diluted earnings per share (EPS) for the first quarter of 2008 were $0.35, versus $0.58 for the first quarter of 2007.
GAAP net income and EPS figures for the first quarter of 2008 were negatively impacted by a $3.6-million loss on the impairment of investments primarily related to the Company's investments in auction-rate securities, a $1.2-million equity loss related to an investment in Western Life Sciences Venture Fund and an accrual of $7.9 million for the estimated contractual obligations to terminate the long-term safety study for BVF-146 (combination of once-daily tramadol with an anti-inflammatory agent). First-quarter 2007 net income and EPS figures were negatively impacted by a $0.6-million restructuring charge related to the December 2006 restructuring of the Company's U.S. commercial operations, and a $0.4 million equity loss.
Product revenues for the first quarter of 2008 were $196.9 million, compared with $238.0 million in the first quarter of 2007, primarily due to lower revenues from the Company's generics portfolio, Cardizem(R) LA and Ultram(R) ER.
Product revenues for Wellbutrin XL(R) were $58.9 million in the first quarter of 2008, compared with $61.4 million in the first quarter of 2007. Wellbutrin XL(R) revenues in each of the first quarters of 2007 and 2008 reflected the December 2006 launch of a generic formulation of the 300mg strength of the product. In the first quarter of 2008, the generic formulation captured 88% of the 300mg dosage strength's total prescription volume. Pursuant to the terms of a comprehensive settlement agreement entered into with a number of generic pharmaceutical companies, a generic version of the 150mg strength of Wellbutrin XL(R) could be launched commencing the earlier of May 30, 2008 or upon an adverse decision of Biovail's appeal of the non-infringement summary judgment previously granted to Anchen Pharmaceuticals, Inc.
Ultram(R) ER generated revenues of $24.1 million in the first quarter of 2008, compared with $30.0 million in the first quarter of 2007. Ultram(R) ER's performance in the first quarter of 2008 reflects a decrease in inventory levels by Biovail's marketing partner Ortho-McNeil, Inc. (OMI), which was partially offset by higher prescription volumes and a price increase. In the first quarter of 2008, Ultram(R) ER captured 5.9% of total prescription volume for the Ultram(R) brand (including generics).
First-quarter 2008 revenues for Biovail's Zovirax(R) franchise were $37.1 million, consistent with the level of the prior-year period, reflecting the impact of price increases offset by a 4% decline in prescription demand and a decrease in inventories at the wholesaler level from 1.5 months to 1.2 months. In the first quarter of 2008, Zovirax(R) Ointment and Zovirax(R) Cream held a combined 73.9% share of the topical herpes market, an increase of 1.5 percentage points in market share versus first-quarter 2007 levels.
Revenues from BPC were $16.2 million in the first quarter of 2008, compared with $13.8 million in the first quarter of 2007, an increase of 17% that reflects the impact of a stronger Canadian dollar and continued growth of Tiazac(R) XC and Wellbutrin(R) XL in Canada. Total prescription volume for Tiazac(R) XC and Wellbutrin(R) XL in the first quarter of 2008 increased 34% and 80%, respectively, compared with the corresponding period in 2007.
In the first quarter of 2008, Cardizem(R) LA generated revenues of $10.2 million, compared with $23.9 million for the corresponding period in 2007. This decrease reflects lower prescription volumes and the first-quarter 2007 fulfillment of back orders for the 120mg and 180mg strengths of the product. The amortization of deferred revenues associated with the May 2005 Kos transaction positively impacted Cardizem(R) LA revenues by $3.8 million in the first quarters of both 2007 and 2008.
Legacy products generated revenues of $33.1 million for the first quarter of 2008, compared with $35.6 million in the first quarter of 2007. This performance reflects lower prescription volumes for these mature products and lower pricing on Tiazac(R) branded and generic products, partially offset by the positive impact of price increases implemented in 2007 and the first quarter of 2008.
Product revenue for Biovail's portfolio of generic products was $17.2 million in the first quarter of 2008, compared with $35.9 million in the first quarter of 2007. This performance reflects lower prescription volumes and a decrease in pricing to remain competitive in the market.
The following table summarizes Biovail's product revenue performance in the first quarter of 2008:
($000s) Q1/08 Revenues Q1/07 Revenues Change (%)
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Wellbutrin XL(R) 58,856 61,405 (4)
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Ultram(R) ER 24,104 30,019 (20)
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Zovirax(R) 37,130 37,283 (-)
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Biovail Pharmaceuticals
Canada 16,240 13,826 17
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Cardizem(R) LA 10,207 23,949 (57)
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Legacy 33,147 35,640 (7)
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Generics 17,230 35,880 (52)
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Total Product Revenues 196,914 238,002 (17)
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Research-and-development revenue was $7.4 million in the first
quarter of 2008, compared with $4.8 million in the corresponding
period in 2007, an increase of 52% that reflects the higher volume of
clinical research and laboratory testing services provided to external
customers by Biovail's Contract Research Division (CRD).
Royalty and other revenue was $4.2 million in the first quarter of
2008, which is consistent with the level of the first quarter of 2007.
Cost of goods sold for the first quarter of 2008 was $53.7
million, compared with $56.4 million in the first quarter of 2007.
Gross margins on product revenues were 73% in the first quarter of
2008, compared with 76% in the first quarter of 2007, reflecting
higher unabsorbed overhead costs as a result of lower production
volumes, lower pricing for the Company's portfolio of generic
pharmaceuticals, an increase in amortization expense associated with
the Zovirax(R) supply-price agreement with GlaxoSmithKline plc (GSK)
and higher costs associated with Biovail's one-third share of the
costs associated with GSK's license agreement with Watson
Pharmaceuticals, Inc. related to Wellbutrin XL(R) 150mg. These items
were partially offset by price increases across other product lines.
Total research-and-development (R&D) expenditures for the first
quarter of 2008 were $36.3 million, compared with $29.7 million for
the first quarter of 2007. Excluding expenses associated with CRD, R&D
expenses were $30.2 million in the first quarter of 2008, compared
with $25.9 million in the first quarter of 2007. This 17%
year-over-year increase reflects an accrual of $7.9 million for the
estimated contractual obligations to terminate the long-term safety
study for BVF-146.
Selling, general and administrative (SG&A) expenses for the first
quarter of 2008 were $43.6 million, compared with $49.6 million in the
first quarter of 2007, a decrease of 12% that reflects lower legal
costs and lower stock-based compensation expense; partially offset by
higher payments to Sciele Pharma, Inc. related to their promotional
efforts for Zovirax(R) and an increase in promotional expenses,
primarily related to the launch of Ralivia(TM) in Canada. Legal
expenses related to legacy litigation and regulatory matters arising
from issues in 2001 to May 2004 were $3.2 million in the first quarter
of 2008, compared with $9.5 million in the prior-year period. SG&A
expenses in the second quarter of 2008 will include approximately $5.0
million in expenses related to management succession planning.
Amortization expense in the first quarter of 2008 was $11.7
million, compared with $12.0 million in the first quarter of 2007, a
decrease of 2% that reflects the write-down of certain intangible
assets in December 2007.
Balance Sheet & Cash Flow
At the end of the first quarter of 2008, Biovail had cash, cash
equivalents and short-term investments of $511.3 million, and
marketable securities of $25.3 million. Biovail currently has $26.8
million of principal invested in auction-rate securities (ARS), all of
which were rated Aaa/AAA at the time of purchase. However, given
declines in underlying collateral values, several of these holdings
have had their ratings downgraded in either or both of the fourth
quarter of 2007 and the first quarter of 2008. Although these
securities continue to pay cash interest, Biovail has been unable to
liquidate its ARS portfolio. As such, the Company has recorded this
portfolio at its estimated fair value of $14.8 million as at March 31,
2008 and has recorded a further impairment charge of $2.9 million in
the first quarter of 2008 (a charge of $6.0 million was recorded in
the fourth quarter of 2007). In addition, the Company recorded an
unrealized loss in other comprehensive income of $0.3 million in the
first quarter of 2008 and $2.8 million in the fourth quarter of 2007.
Cash flow from operations was $92.7 million in the first quarter
of 2008, compared with $119.8 million in the first quarter of 2007,
which reflects lower net income in 2008. Net capital expenditures in
the first quarter of 2008 amounted to $9.7 million, compared with $5.7
million in the prior-year period.
Conference Call
Biovail management will host a conference call and Webcast on
Thursday, May 8, 2008, at 8:30 a.m. EDT for Company executives to
discuss 2008 first-quarter financial results and the Company's new
strategic plan. For further information on the new strategic plan, see
separate news release issued May 8, 2008 - Biovail Announces New
Strategic Focus. Following the discussion, Biovail executives will
address inquiries from research analysts.
A live Webcast of this call will be available through the Investor
Relations section of Biovail's Web site at www.biovail.com. To access
the call live, please dial 416-641-6136 (Toronto and International
callers) and 1-866-225-9256 (U.S. and Canada). Listeners are
encouraged to dial in 10 minutes before the call begins to avoid
delays.
A replay of the conference call will be available until 7 p.m. EDT
on Thursday, May 15, 2008, by dialing 416-695-5800 (Toronto and
International callers) and 1-800-408-3053 (U.S. and Canada), using
access code, 3259219#.
Caution Regarding Forward-Looking Information and "Safe Harbor"
Statement
To the extent any statements made in this release contain
information that is not historical, these statements are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and may be forward-looking
information under applicable Canadian provincial securities
legislation (collectively, "forward-looking statements"). These
forward-looking statements relate to, among other things, our
objectives, goals, targets, strategies, intentions, plans, beliefs,
estimates, outlook and guidance, including, without limitation,
statements concerning the Company's objectives, goals, strategies,
beliefs, intentions, plans, estimates and outlook, including, without
limitation, the timing of the launch of a generic version of the 150mg
strength of Wellbutrin XL(R),, and can generally be identified by the
use of words such as "guidance", "believe," "anticipate," "expect,"
"intend," "plan," "will," "may" and other similar expressions. In
addition, any statements that refer to expectations, projections or
other characterizations of future events or circumstances are
forward-looking statements.
Although Biovail believes that the expectations reflected in such
forward-looking statements are reasonable, such statements involve
risks and uncertainties, and undue reliance should not be placed on
such statements. Certain material factors or assumptions are applied
in making forward-looking statements, and actual results may differ
materially from those expressed or implied in such statements.
Important factors that could cause actual results to differ materially
from these expectations include, among other things: the difficulty of
predicting U.S. Food and Drug Administration, Canadian Therapeutic
Products Directorate and European regulatory approvals, acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, new product development and launch, reliance on
key strategic alliances, availability of raw materials and finished
products, infringement and alleged infringement of our intellectual
property rights and those of others, the regulatory environment, tax
rate assumptions, the outcome of legal proceedings and settlements
thereto, the anticipated proxy contest in connection with the election
of the Board of Directors at the Company's upcoming annual meeting of
shareholders, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the
Securities and Exchange Commission and the Ontario Securities
Commission, as well as the Company's ability to anticipate and manage
the risks associated with the foregoing. Additional information about
these factors and about the material factors or assumptions underlying
such forward-looking statements may be found in the body of this news
release, as well as under the heading "Risk Factors" contained in Item
3(D) of Biovail's most recent Annual Report on Form 20-F.
The Company cautions that the foregoing list of important factors
that may affect future results is not exhaustive. When relying on
Biovail's forward-looking statements to make decisions with respect to
the Company, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events.
Biovail undertakes no obligation to update or revise any
forward-looking statement.
About Biovail Corporation
Biovail Corporation is a specialty pharmaceutical company, engaged
in the formulation, clinical testing, registration, manufacture and
commercialization of pharmaceutical products utilizing advanced
drug-delivery technologies. For more information about Biovail, visit
the Company's Web site at www.biovail.com.
For further information, please contact Nelson F. Isabel at
905-286-3000 or send inquiries to [email protected].
BIOVAIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(All dollar amounts are expressed in thousands of U.S. dollars, except
per share data)
(Unaudited)
Three Months Ended
March 31
------------------------
2008 2007
------------ -----------
REVENUE
Product sales $ 196,914 $ 238,002
Research and development 7,353 4,841
Royalty and other 4,231 4,162
------------ -----------
208,498 247,005
------------ -----------
EXPENSES
Cost of goods sold (exclusive of amortization
shown separately below) 53,735 56,416
Research and development 36,332 29,722
Selling, general and administrative 43,597 49,594
Amortization 11,694 11,981
Restructuring costs - 645
------------ -----------
145,358 148,358
------------ -----------
Operating income 63,140 98,647
Interest income 3,468 9,761
Interest expense (242) (8,677)
Foreign exchange gain (loss) 221 (288)
Equity loss (1,195) (424)
Loss on impairment of investments (3,616) -
------------ -----------
Income before provision for income taxes 61,776 99,019
Provision for income taxes 5,400 5,200
------------ -----------
Net income $ 56,376 $ 93,819
============ ===========
Basic and diluted earnings per share $ 0.35 $ 0.58
============ ===========
Basic and diluted weighted average number of
common shares outstanding (000s) 161,024 160,458
============ ===========
Cash dividends declared per share $ 0.375 $ 0.375
============ ===========
BIOVAIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(All dollar amounts are expressed in thousands of U.S. dollars)
(Unaudited)
At At
March 31 December 31
2008 2007
------------ -----------
ASSETS
Cash and cash equivalents $ 431,537 $ 433,641
Short-term investments 79,725 -
Other current assets 223,954 273,376
------------ -----------
735,216 707,017
Marketable securities 23,758 24,417
Long-term investments 23,637 24,834
Property, plant and equipment, net 233,799 238,457
Intangible assets, net 616,526 630,514
Goodwill 100,294 100,294
Deferred tax assets, net of valuation
allowance 18,000 20,700
Other long-term assets, net 38,506 35,882
------------ -----------
$ 1,789,736 $1,782,115
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 390,225 $ 367,578
Long-term liabilities 108,887 116,718
Shareholders' equity 1,290,624 1,297,819
------------ -----------
$ 1,789,736 $1,782,115
============ ===========
BIOVAIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts are expressed in thousands of U.S. dollars)
(Unaudited)
Three Months Ended
March 31
------------------------
2008 2007
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 56,376 $ 93,819
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,073 21,885
Amortization of deferred financing costs 130 531
Amortization of discounts on long-term
obligations - 201
Accrued legal settlements (10,000) -
Impairment charges 3,616 -
Stock-based compensation 1,429 4,226
Equity loss 1,195 424
Other 568 696
Changes in operating assets and
liabilities 14,289 (1,954)
------------ -----------
Net cash provided by operating activities 92,676 119,828
Net cash used in investing activities (94,279) (5,730)
Net cash used in financing activities (138) (78,494)
Effect of exchange rate changes on cash and
cash equivalents (363) 31
------------ -----------
Net increase (decrease) in cash and cash
equivalents (2,104) 35,635
Cash and cash equivalents, beginning of period 433,641 834,540
------------ -----------
Cash and cash equivalents, end of period $ 431,537 $ 870,175
============ ===========
CONTACT: Biovail Corporation
Nelson F. Isabel, 905-286-3000
Vice-President, Investor Relations
& Corporate Communications
SOURCE: Biovail Corporation
