Focus on High-Growth Central Nervous System Disorder Specialty
Markets;
Board of Directors Confirms Annual Dividend Policy of $1.50 per
Share;
Board of Directors Approves Filing of Normal Course Issuer Bid For
up to 14 Million Shares;
Company to Close Puerto Rico Operations, Reduce R&D Overhead
Costs;
Targets Investment in R&D of Over $600 Million Through 2012;
Targets Cash From Non-Core Asset Sales of Over $100 Million;
Five New Director Nominees Approved by Board of Directors
TORONTO--(BUSINESS WIRE)--May 8, 2008--Biovail Corporation
(NYSE/TSX: BVF) today announced several new initiatives stemming from
its strategic review, including a new strategic focus on developing
specialty products targeted towards central nervous system (CNS)
disorders intended to drive sustainable growth. The Company also
announced Board approval for the filing of a Normal Course Issuer Bid
for up to 14 million shares and the addition of five new nominees to
the Company's proposed slate of Directors for the upcoming annual
meeting of shareholders.
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.
"After an extensive review of all aspects of Biovail's business
and of the strategic options available to the Company, Biovail's Board
of Directors has considered and approved a new strategic focus that we
believe will create significant value for shareholders," said Biovail
Chief Executive Officer Bill Wells. "We will leverage Biovail's
existing core capabilities in drug delivery and formulation for the
therapeutic area of CNS disorders - a large market where unmet medical
needs and growth potential are high. We intend to invest over $600
million in research-and-development through 2012, exploring niche
in-licensed and acquired late-stage new chemical entities (NCEs), new
indications and in-house reformulation opportunities. We intend to
optimize operating efficiencies across all functional areas of the
Company, and will return capital in excess of our business needs
through ongoing dividend payments to shareholders and stock buyback
programs."
As disclosed in March 2008, an Independent Committee of the
Company's Board of Directors was established to consider a number of
strategic alternatives to increase shareholder value. Under the
direction of the Independent Committee, management also explored
operational strategies that would allow the Company to create
sustainable growth, more effectively capitalize on its core
capabilities and continue to return capital to shareholders. The
result of these activities formed the basis for the Company's new
strategic focus.
The key features of Biovail's new strategic focus will be
presented in detail in its Proxy Circular, which will be mailed to all
shareholders shortly, and made available on the Company's website.
Highlights of the new strategic focus include the following:
-- By focusing its pipeline-development and business-development
efforts on niche CNS disorders, Biovail believes it can build
upon its expertise within the category and, where appropriate,
reach key prescribing physicians with a small in-house sales
organization. The Company believes CNS disorders represent a
$70 billion global market, with growth expected in the
low-to-mid double digits in niche specialty CNS markets, such
as Parkinson's disease and multiple sclerosis.
-- The Company will take steps to rationalize its (i)
manufacturing operations, (ii) pharmaceutical sciences
operations, and (iii) general and administrative expenses.
-- The Company is committed to exercising financial discipline in
its capital allocation strategies and in distributing capital
to shareholders through ongoing dividend payments and, when
appropriate, buying back stock.
Operating Efficiency Initiatives
To improve operating efficiencies, Biovail is taking steps to
close the Company's two Puerto Rico manufacturing facilities and
transfer certain manufacturing processes to its Steinbach, Manitoba
facility. Biovail believes these closures, which are expected to take
18 to 24 months to complete, should not result in any supply
disruptions, and are intended to reduce the Company's cost
infrastructure and increase available capital.
In other functional areas, Biovail intends to enhance efficiencies
in its research-and-development group, while continuing to invest
heavily in the Company's product-development pipeline which will be
focused on high-growth niche CNS markets. Biovail intends to invest
over $600 million in research and development through 2012.
Financial Impact
Biovail believes that the implementation of its new strategic
focus, including the closure of its manufacturing facilities in Puerto
Rico and the implementation of other operating-efficiency initiatives
described above will result in charges of approximately $80 million to
$100 million, which will be recognized in the coming quarters. Of
these amounts, it is expected that the cash component will be in the
range of $30 million to $40 million.
Biovail anticipates that these efficiency initiatives, once fully
implemented, will result in annual savings of $30 million to $40
million.
Other Initiatives
Biovail will continue its ongoing efforts to resolve various
legal, regulatory and criminal matters arising from allegations of
conduct in the period from 2001 to May 2004. Resolution of these
matters will materially reduce associated expenses and increase
available capital. To date, Biovail has incurred cumulative legal
expenses and penalties of over $230 million (approximately $150
million net of insurance recoveries) relating to these legacy matters.
The Company is also exploring the divestiture and/or monetization
of certain non-core assets, which the Company believes could result in
cash proceeds in excess of $100 million.
The Company intends to utilize capital generated from these
initiatives to support: 1) the transition to the new strategic focus,
2) R&D investments, 3) focused business development activities and 4)
the return of capital to shareholders.
Normal Course Issuer Bid
Biovail today announced its intention to file a normal course
issuer bid with Canadian securities regulators, pursuant to which the
Company may repurchase, subject to regulatory approval, up to 14
million of its common shares during a one-year period. Any common
shares purchased by the Company under the issuer bid will be
cancelled. Biovail intends to begin purchasing its common shares
following receipt of regulatory approval. For further information, see
the separate news release issued May 8, 2008, Biovail Announces Normal
Course Issuer Bid.
New Board Nominees
Biovail also announced today that five new independent candidates
have agreed to be included in the Company's proposed slate of
Directors for consideration at its annual meeting of shareholders,
which is scheduled for June 25, 2008 at 10:00am EDT at The Suites at
King West in Toronto, Canada. The nominees are listed in the table
below:
Name Experience
----------------------------------------------------------------------
Serge Gouin Chairman of Quebecor Media Inc.
----------------------------------------------------------------------
David H. Laidley Retired partner and former Chairman of Deloitte &
Touche LLP
----------------------------------------------------------------------
J. Spencer Lanthier Retired partner and former Chairman and Chief
Executive of KPMG Canada
----------------------------------------------------------------------
Mark Parrish Former CEO of Healthcare Supply Chain Services,
(Cardinal Health, Inc.)
----------------------------------------------------------------------
Robert N. Power Former Executive Vice-President of Global Business
Operations of Wyeth
----------------------------------------------------------------------
Additional information on these nominees will be provided in the
Company's Proxy Circular which will be mailed to shareholders shortly.
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 the Company's new strategic plan and 2008 first-quarter
financial results. 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 ability to implement and
effectively execute its new strategic focus, the anticipated impact of
the Company's new strategic focus, the Company's beliefs and
expectations regarding the specialty CNS market, the Company's
intention to rationalize its operations and the anticipated effects of
such rationalization, the Company's intentions regarding the sale of
non-core assets and the anticipated proceeds from such sales, the
timing and expected savings from the closure of the Company's Puerto
Rico operations and other efficiency initiatives, the quantum and type
of research-and-development investments, the Company's ability to
return capital to shareholders, the Company's intentions regarding its
dividend policy, the Company's intention to commence a normal course
issuer bid and to repurchase its shares, the ability of the Company to
resolve legal, regulatory and criminal matters and the expected impact
of the resolution of these matters, and can generally be identified by
the use of words such as "targets", "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, fluctuations in operating results, the availability of
capital and satisfaction of applicable laws for dividend payments, the
market liquidity of our shares and our satisfaction of applicable laws
relating to the acquisition of our shares, pressures on the
pharmaceutical industry including from third party payors, the
anticipated proxy contest in connection with the election of the board
of directors at our upcoming shareholders meeting 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].
CONTACT: Biovail Corporation
Nelson F. Isabel, 905-286-3000
Vice-President, Investor Relations
and Corporate Communications
SOURCE: Biovail Corporation
