* Says business development always comes first
* Eyeing a number of acquisitions; has cash
* Shares up 1.5 percent at C$10.85 (Adds company, analyst comments; in U.S. dollars unless noted)
By Scott Anderson
TORONTO, Nov 6 (Reuters) - Acquisition-hungry Biovail Corp BVF.TO BVF.N may cut or eliminate its dividend if an attractive acquisition opportunity surfaces, its chief executive said on Thursday.
And the decision might come sooner rather than later as the Canadian drugmaker eyes a number of acquisitions that it said would be beneficial to its results within the first year.
"We have always said that the dividend is sustainable. We believe that our underlying operations are strong and that we would be able to continue to pay the dividend through the period of our strategic plan," Chief Executive Bill Wells told Reuters.
"The only difference out there is that business development always comes first and has first call on our cash flows."
Biovail has steadfastly defended the controversial $1.50 a share dividend which it promised a number of years back despite calls from analysts to scrap the payment in favor of advancing its dwindling product pipeline.
"They are going to be prudent in determining how they are going to proceed with their business development. I don't think they are going to jump into something that doesn't fit their criteria and I don't anticipate that they will do anything in the near future," said Neil Maruoka, an analyst at Canaccord Adams Inc.
"But if it is immediately accretive and if it is a great opportunity that fits right into the strategy, then that would be a great reason to alter the dividend policy, but really no other reason than that."
Wells said Biovail, which earlier this year shifted its focus to treatments for central nervous system disorders, said it is looking at a number of acquisitions of various sizes to advance its strategy.
The shift from controlled-release drugs sparked a messy battle with founder Eugene Melnyk, who attempted to replace the company's board with his own slate of directors. Shareholders voted in favor of the incumbent board in August.
Biovail jump-started that plan in September when it bought privately held drugmaker Prestwick Pharmaceuticals for $100 million. U.S.-based Prestwick holds the Canadian and U.S. rights to Xenazine, a drug used to treat chorea, an ailment associated with Huntington's disease.
Wells said Biovail, which has a cash balance of about $200 million and boasts a $250 million line of credit, is poised to make further purchases as the global credit crunch makes some companies vulnerable.
"Certainly with the current market environment, with all the financial difficulties out there, opportunities are becoming more and more interesting for us," he said.
"As a consequence we are seeing a number of opportunities that are right in the core of our strategy."
THIRD-QUARTER RESULTS DROP
Earlier on Thursday Biovail reported a lower third-quarter profit as generic versions of its key Wellbutrin anti-depressant and restructuring charges bit into results and it warned that the hangover from its restructuring would linger for the next few quarters.
The company said it earned $48.4 million, or 31 cents a share in the quarter, down from $65.9 million, or 41 cents a share last year.
The 2008 results included restructuring costs of $7.6 million, or 5 cents a share, related to the closure of two plants in Puerto Rico and a research facility in Ireland. This will result in a 20 percent reduction in staff at the company when completed.
Wells said the charges are expected to amount to upward of $100 million and linger until 2010.
Revenue was $181.1 million, down from $188.9 million.
Analysts had expected an average of 28 cents a share before items and revenue of $163.1 million, according to Reuters estimates.
The company's shares were up 1.5 percent at C$10.85 on the Toronto Stock Exchange.
($1=$1.18 Canadian) (Reporting by Scott Anderson; editing by Rob Wilson)