Biovail says Melnyk just out for control
(In U.S. dollars)
TORONTO, June 5 (Reuters) - A proposal by Biovail Corp (BVF.TO) founder Eugene Melnyk to appoint new directors and shift the drugmaker's strategy is unrealistic and represents an attempt to take control of the company, Biovail's chief executive said on Thursday.
In the latest salvo in a heated proxy battle, CEO Bill Wells said the dissident plan was "out of touch" with the changing pharmaceutical industry, and was a ploy for Melnyk to make the most of his 12 percent stake in the company.
"What this is all about is Eugene Melnyk trying to take control of the company without paying a premium to other shareholders. It is all about control, that's all he cares about," Wells told Reuters.
The interview came as Biovail released its "fight letter" to dispute Melnyk's proposals ahead of the June 25 meeting when shareholders will vote on them.
Melnyk, who started the company about 20 years ago and stepped down as chairman last year, plans to replace the current board with a slate that would include former CEO Bruce Brydon, and go ahead with a strategy that would revitalize the company's drug pipeline, including a return to some generic pharmaceuticals.
The company currently relies heavily on its antidepressant Wellbutrin and its Cardizem heart drugs.
However, Wells said the generic path has "run out of gas", and that Biovail's current troubles are in large part a legacy of Melnyk's own influence, including his turn as CEO from 2002 to 2004."
"Eugene Melnyk is the problem Biovail is trying to solve -- not the answer," the fight letter reads.
NEW STRATEGY
In the letter, Biovail trumpets its own short-term strategy, which includes shutting down money-losing plants in Puerto Rico, and disposing of other non-core items.
It also plans to spend $600 million in research and development for new treatments for central nervous system disorders.
Wells also said the company would look at corporate acquisitions, provided they would add to earnings in the short term and don't put too much pressure on the balance sheet.
"Acquisitions will certainly be part of our growth strategy for the company, as will in-licensing for our products and also internal development of products," he said.
Melnyk and Biovail have seen their share of regulatory and legal issues over the years, including lawsuits stemming from an October 2003 truck crash involving a shipment of its Wellbutrin drug. Biovail's disclosure of the impact of the accident on its 2003 results resulted in U.S. Securities and Exchange Commision charges. Continued...
