* 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
By Scott Anderson
TORONTO, Nov 6 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
"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
"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
"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
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
The company's shares were up 1.5 percent at C$10.85 on the
Toronto Stock Exchange.
(Reporting by Scott Anderson; editing by Rob Wilson)