WRAPUP 1-Biovail, Labopharm to spend on new drug launches

Thu Feb 25, 2010 2:43pm EST

* Biovail to spend $130 mln on research and development

* Biovail shares up 1.1 percent at C$15.45

* Labopharm sees launch of trazodone in Q3

* Labopharm shares down 2.5 pct at C$1.55 (In U.S. dollars unless noted)

By Scott Anderson

TORONTO, Feb 25 (Reuters) - Two Canadian drugmakers, Biovail Corp BVF.TO BVF.N and Labopharm Inc DDS.TO DDSS.O, said on Thursday they plan to spend more on new drug launches this year as they reported quarterly results.

Biovail, Canada's biggest publicly traded drugmaker, said its 2010 earnings per share would be below 2009 levels, while revenue growth would be modest as it spends more on drug development and marketing.

The company has been focusing on treatments for the central nervous system for the past two years.

"Naturally as you increase expenses to invest for the future, it means that it will depress results," said Biovail Chief Executive Bill Wells. "All the programs are moving ahead simultaneously and, of course, it implies additional costs."

The Toronto-based company will spend about $130 million on research and development not including upfront or milestone payments in 2010 as it continues to push a number of treatments for conditions such as Parkinson's disease psychosis and schizophrenia to late stage trials. In 2009, it spent $120.8 million on R&D which included upfront payments.

"The company is making a significant investment for the future in 2010," RBC Dominion Securities analyst Doug Miehm said in a note.

"These are investments that will ultimately lead to a more valuable company and as such we continue to believe a successful central nervous system strategy should ultimately lead to an expansion in Biovail's multiple."

It also plans develop a U.S. sales team for its treatment for agitation in patients with schizophrenia or bipolar disorder.

Biovail signed a collaboration deal with Alexza Pharmaceuticals Inc (ALXA.O) two weeks ago to develop and commercialize the inhaled treatment in the United States and Canada. It expects to receive U.S. approval for the product in mid-October.

Small Montreal-based Labopharm also expects to spend more money this year as it moves ahead with the launch of its once-daily trazodone antidepressant in the United States.

The U.S. Food and Drug Administration approved the treatment earlier this month and Labopharm expects to launch it under the name Oleptro on the U.S. market in the third quarter.

"We have invested a considerable amount of time and effort to understand our physician and patient audiences, and are in the process of finalizing a commercial strategy, including positioning, market access and distribution," Labopharm President James Howard-Tripp said in a news release.

Labopharn reported a fourth-quarter loss on Thursday that was in line with analyst estimates, but sales fell short of expectations due to light licensing revenue.

Its loss narrowed to C$6.4 million, or 11 Canadian cents a share, from C$14.6 million, or 26 Canadian cents a share, a year earlier. Revenue rose to C$6.7 million, but licensing revenue was flat at C$1.2 million.

Analysts on average had expected Labopharm to report a loss of 11 Canadian cents a share and revenue of C$7.5 million, according to Thomson Reuters I/B/E/S.

Labopharm's shares were down 2.5 percent at C$1.55 in afternoon trade on Thursday.

Profit at Biovail fell due to a series of one-time items but was still higher than the market had expected.

Biovail earned $73 million, or 46 cents a share, in the fourth quarter, ended Dec. 30, down from a year-earlier profit of $120.4 million, or 76 cents a share. In the fourth quarter of 2008 the company's results were lifted by a $66.2 million, or 42 cents per share, deferred income-tax benefit.

Excluding one-time items, earnings in the latest quarter were 56 cents a share. Revenue rose 33 percent to $241.1 million.

Analysts on average had expected earnings of 40 cents a share and revenue of $223.6 million, according to Thomson Reuters I/B/E/S.

Biovail's shares were up 1.1 percent at C$15.45 on the Toronto Stock Exchange on Thursday.

($1=$1.06 Canadian) (Additional reporting by Arnika Thakur in Bangalore; editing by Peter Galloway)