October 9, 2008 / 2:55 PM / 9 years ago

UPDATE 1-Biovail faces suit that it misled investors

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TORONTO, Oct 9 (Reuters) - Biovail Corp BVF.TO BVF.N said on Thursday that a new class action lawsuit that claims that it misled investors concerning an anti-depressant formula were "without merit" and that it plans to "defend itself vigorously."

The class action suit, which was filed recently in a New York area court, claims that Biovail misled investors about the regulatory approval status of its BVF-033 treatment, a salt formulation version of the generic antidepressant Wellbutrin XL.

The claim alleges that Biovail did not disclose that while the U.S. Food and Drug Administration required a single dose study of the effectiveness of BVF-033, the company had in fact submitted a multiple-dose study.

The claimants say that Biovail's FDA application for BVF-033 did not meet the requirements set forth by the FDA, and that the company failed to inform investors that FDA approval would therefore be delayed.

"Biovail believes the claim is completely without merit and will defend itself vigorously," the company said in a release.

A company spokesman declined further comment.

The suit covers the period between Dec. 14, 2006 and July 19, 2007 and seeks to recover damages on behalf of purchasers of the company's shares. Biovail shares dropped more than 20 percent on July 20, 2007 -- to $20.03 in New York from $25.51 -- the day it received a non-approval letter from the FDA concerning the treatment.

The shares, which have fallen dramatically in the past year amid a string of regulatory and legal disappointments as well as stiff competition from generic drugs, were off 1.3 percent at $8.65 in New York on Thursday. They were down 0.5 percent at C$8.69 in Toronto.

Biovail is no stranger to regulatory and shareholder suits.

The U.S. Securities Exchange Commission has already investigated a Biovail warning of a revenue shortfall following an October 2003 truck accident involving a shipment of Wellbutrin antidepressant, and the company's disclosure of the impact of that accident on its 2003 results.

The SEC said Biovail executives had been obsessed with meeting quarterly and annual targets, and that they had overstated earnings and hid losses to deceive investors.

Biovail agreed to pay $10 million to settle the case, but four current and former officers still face charges.

Earlier this year the company agreed to pay $24.6 million to settle a case that was launched in connection with the commercial launch of its Cardizem LA heart drug.

The drugmaker said the settlement with the U.S. Department of Justice eliminates any criminal liability for the parent company and allows it to continue doing business in the United States. ($1=$1.13 Canadian) (Reporting by Scott Anderson; Editing by Peter Galloway)

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