EX-99.1 2 ex-991.txt EXHIBIT 99.1 EXHIBIT T INTERIM REPORT 2000 FIRST QUARTER REPORT [BIOVAIL LOGO] DEAR FELLOW SHAREHOLDERS The first quarter of 2000 has seen Biovail Corporation continue the excellent performance achieved throughout 1999. The Company reported record first quarter financial results, with total revenues 70% greater than the first quarter 1999, driven by product sales 168% better than the first three months of last year. In addition, I am pleased to report a number of significant achievements in the first quarter, including new product launches, in-licensing agreements and exciting progress in our product pipeline. RECORD PRODUCT SALES Biovail recorded $33.6 million from product sales in the first quarter of 2000, a substantial increase from the $12.6 million in sales recorded in the same period of last year. The increase is due to continuing strong sales of Tiazac-Registered Trademark- in the U.S., where it currently maintains a 17% share of the diltiazem market; continued penetration of Tiazac-Registered Trademark- and other in-licensed products marketed by the Company's Crystaal division in Canada; and the recent U.S. launches of generic versions of Adalat CC, Cardizem CD and Voltaren XR through our U.S. marketing partner Teva Pharmaceuticals. NEW PRODUCT LAUNCHES In the first quarter, Biovail successfully launched two significant new generic products. The Company's generic version of Voltaren XR, a treatment for osteoarthritis and rheumatoid arthritis with annual U.S. branded sales of $98 million, received FDA approval in February, and was immediately launched in the U.S. market by Teva Pharmaceuticals Industries Ltd. Teva also launched Biovail's generic Adalat CC in a 30mg dosage strength. At present, the 30mg dosage accounts for approximately 30% of total Adalat CC sales of $357 million. In addition, the launch in the U.K. of Nurofen Meltlets, a new form of ibuprofen developed using Biovail's patented Flash Dose-Registered Trademark- technology, marked a significant milestone. Nurofen Meltlets are marketed in the U.K. by Boots Healthcare. Boots' Nurofen is currently the U.K.'s best selling pain relief medication. CRYSTAAL PORTFOLIO GROWTH Crystaal, Biovail's successful Canadian sales and marketing operation, significantly increased its portfolio in the first quarter with the in-licensing of three new products. Ampligen, a medication used in the treatment of chronic fatigue syndrome, was in-licensed from Hemispherx Biopharma Inc. and is currently awaiting final marketing approval. Fibrostat, a treatment for scars due to burns and surgery, was in-licensed from Procyon Biopharma. Fibrostat is in late Phase II trials. Monocor, a beta-blocker indicated for mild to moderate hypertension was in-licensed from Wyeth-Ayerst Laboratories and is expected to be launched in the second quarter. These join the five products currently marketed in Canada by Crystaal, including Tiazac-Registered Trademark- and four selected in-licensed products. MANUFACTURING EXPANSION Biovail's existing manufacturing operations in Manitoba, Canada and Puerto Rico are operating at peak efficiency to meet the demand for the Company's products. To ensure that the Company will continue to meet its future requirements, Biovail announced the acquisition of the Dorado, Puerto Rico manufacturing facility from McNeil Pharmaceuticals Corp., a division of Johnson & Johnson Inc., in the quarter. The Dorado plant is an FDA-approved cGMP facility currently occupying 120,000 sq. ft. with room for expansion. PIPELINE PROGRESS Significant progress was made in Biovail's product pipeline in the first quarter of 2000, highlighted by two exciting developments. In March, FDA approval was received for Biovail's NDA for a novel once-daily controlled-release formulation of Diltiazem Hcl. In January, the Company initiated Phase III clinical trials of its novel once-daily controlled-release formulation of Buspirone, a successful medication used to treat generalized anxiety disorders. Buspirone is currently only available as a three-times-daily immediate-release product. Also in Biovail's NDA pipeline, development of a controlled-release formulation of the antidepressant Celexa is proceeding on schedule and other products, at various stages of development, are progressing favourably. The Company's controlled-release generic pipeline includes three products awaiting final FDA approval and several others under development. OTHER DEVELOPMENTS Additional developments during the first quarter of 2000 included the successful completion of two financing programs that raised gross proceeds of approximately $400 million. Approximately $100 million was raised from an equity offering, and $300 million from the issuance of convertible preferred debentures. Approximately $141 million of these proceeds were used to retire the Company's 10 7/8% U.S. Dollar Senior Notes. Finally, Biovail completed the sale of its Irish manufacturing operations, acquired in the acquisition of Fuisz Technologies Ltd., to Stada Arzneimittel AG for $20 million. RECORD FINANCIAL RESULTS Effective January 1, 2000, Biovail changed its accounting reporting convention to U.S. GAAP from Canadian GAAP. In addition, the Company began reporting its earnings per share on a diluted basis. Biovail reported record financial results for the first quarter of 2000. Revenue for the first quarter increased by 70% to $46.9 million, compared to $27.6 million for the first quarter of last year. Operating income for the quarter was $14.2 million, a 32% improvement over the $10.8 million reported in first quarter 1999. Diluted earnings per share before extraordinary item increased by 27% to $0.19 per share over first quarter 1999 diluted earnings per share of $0.15. This excellent start to the new year, both financially and in terms of Company progress, clearly positions Biovail for an outstanding 2000. On behalf of the Board, I offer my gratitude to the employees of Biovail for all of their efforts and to you, our shareholders, for your continued support. (signed) Eugene Melnyk Eugene Melnyk Chairman of the Board CONSOLIDATED BALANCE SHEETS IN ACCORDANCE WITH U.S. GAAP (ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
MARCH 31, DECEMBER 31, (UNAUDITED) 2000 1999 ----------- --------- ------------ ASSETS CURRENT Cash and cash equivalents $475,670 $178,086 Short-term investments 19,547 65,893 Accounts receivable 75,577 60,571 Inventories 18,130 12,701 Assets held for disposal -- 20,000 Deposits and prepaid expenses 1,984 3,172 -------- -------- 590,908 340,423 LONG-TERM INVESTMENTS 3,190 12 PROPERTY, PLANT AND EQUIPMENT, net 47,193 45,300 OTHER ASSETS, net 89,878 86,478 -------- -------- $731,169 $472,213 ======== ======== LIABILITIES CURRENT Accounts payable $ 26,521 $ 22,685 Accrued liabilities 26,813 31,107 Income taxes payable 3,412 3,585 Customer prepayments 4,473 4,962 Deferred tax liability 336 336 Current portion of long-term debt 1,318 12,016 -------- -------- 62,873 74,691 DEFERRED TAX LIABILITY 4,614 4,698 CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES 300,000 -- LONG-TERM DEBT -- 125,488 -------- -------- 367,487 204,877 -------- -------- SHAREHOLDERS' EQUITY Common shares, no par value, unlimited shares authorized, 64,731,000 and 62,196,000 issued and outstanding at March 31, 2000 and December 31, 1999, respectively 475,470 373,962 Warrants 8,244 8,244 Warrant subscription receivable (1,005) (2,287) Deficit (120,741) (113,843) Accumulated other comprehensive income 1,714 1,260 -------- -------- 363,682 267,336 -------- -------- $731,169 $472,213 ======== ========
CONSOLIDATED STATEMENTS OF INCOME (LOSS) IN ACCORDANCE WITH U.S. GAAP (ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
THREE MONTHS ENDED MARCH 31, ------------------------- (UNNAUDITED) 2000 1999 ------------ ----------- ----------- REVENUE Product sales $ 33,631 $ 12,562 Research and development 10,501 6,077 Royalty and licensing 2,728 8,952 ----------- ----------- 46,860 27,591 ----------- ----------- EXPENSES Cost of goods sold 11,035 5,039 Research and development 11,766 5,324 Selling, general and administrative 9,839 6,468 ----------- ----------- 32,640 16,831 ----------- ----------- OPERATING INCOME 14,220 10,760 INTEREST EXPENSE, net (266) (2,792) ----------- ----------- INCOME BEFORE INCOME TAXES 13,954 7,968 PROVISION FOR INCOME TAXES 813 533 ----------- ----------- INCOME BEFORE EXTRAORDINARY ITEM 13,141 7,435 EXTRAORDINARY ITEM -- Premium paid on early extinguishment of U.S. Dollar Senior Notes (20,039) -- ----------- ----------- NET INCOME (LOSS) $ (6,898) $ 7,435 =========== =========== BASIC EARNINGS (LOSS) PER SHARE Income before extraordinary item $ 0.21 $ 0.15 Extraordinary item (0.32) -- ----------- ----------- Net income (loss) $ (0.11) $ 0.15 =========== =========== DILUTED EARNINGS (LOSS) PER SHARE Income before extraordinary item $ 0.19 $ 0.15 Extraordinary item (0.29) -- ----------- ----------- Net income (loss) $ (0.10) $ 0.15 =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 62,792,000 49,207,000 =========== =========== Diluted 70,261,000 50,388,000 =========== ===========
CONSOLIDATED STATEMENTS OF CASH FLOWS IN ACCORDANCE WITH U.S. GAAP (ALL DOLLARS AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
THREE MONTHS ENDED MARCH 31, --------------------- (UNAUDITED) 2000 1999 ----------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (6,898) $ 7,435 Depreciation and amortization 5,540 1,489 Deferred income tax provision (84) -- Extraordinary item -- Premium paid on early extinguishment of U.S. Dollar Senior Notes 20,039 -- Compensation cost for employee stock options -- 281 --------- --------- 18,597 9,205 Change in non-cash operating items: Decrease (increase) in accounts receivable (12,340) 1,466 Increase in inventories (5,550) (3,030) Decrease in deposits and prepaid expenses 1,188 45 Decrease in accounts payable and accrued liabilities (3,241) (383) Decrease in income taxes payable (177) (386) Increase (decrease) in customer prepayments (489) 9,440 --------- --------- (20,609) 7,152 --------- --------- (2,012) 16,357 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment, net (3,929) (1,611) Maturity of short-term investments, net 46,346 -- Acquisition of long-term investments (2,285) -- Proceeds from assets held for disposal 17,000 -- Decrease in other assets 261 -- Advance of executive stock purchase plan loans -- (52) --------- --------- 57,393 (1,663) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of share capital 102,298 1,424 Repurchase of share capital -- (14,933) Issuance of convertible subordinated preferred equivalent debentures, net of financing costs 290,312 -- Repurchase of U.S. Dollar Senior Notes (141,017) -- Reduction in other long-term debt (10,651) (300) Collection of warrant subscription receivable 1,282 640 --------- --------- 242,224 (13,169) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (21) (548) --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 297,584 977 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 178,086 78,279 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 475,670 $ 79,256 ========= =========
CORPORATE INFORMATION BOARD OF DIRECTORS EUGENE N. MELNYK Chairman of the Board, Biovail Corporation BRUCE D. BRYDON Chief Executive Officer, Biovail Corporation ROBERT A. PODRUZNY President and Chief Operating Officer, Biovail Corporation KENNETH C. CANCELLARA, Q.C. Senior Vice President, General Counsel and Secretary, Biovail Corporation ROLF K. REININGHAUS Senior Vice President, Corporate and Strategic Development, Biovail Corporation WILFRED BRISTOW Vice President, Nesbitt Burns Inc. ROGER ROWAN President and Chief Operating Officer, Watt Carmichael Inc. ROBERT VUJEA President, R&D Chemical Corporation
TRADING SYMBOLS REGISTRARS AND TRANSFER AGENTS --------------- ------------------------------ Common Shares: BVF Common Share CIBC Mellon Trust Company Warrants: BVF_w Toronto, Canada Convertible ChaseMellon Shareholder Subordinated Services Preferred New York, New York Equivalent Debentures: BVF_p
THE ANNUAL MEETING OF SHAREHOLDERS The annual meeting of shareholders will be held at 10:00 a.m. Monday, June 26, 2000 at the Royal York Hotel, Territories Room, 100 Front Street, Toronto, Ontario. SHAREHOLDER INFORMATION HEAD OFFICE Biovail Corporation 2488 Dunwin Drive Mississauga, Ontario Canada L5L 1J9 HOW TO REACH US FOR MORE INFORMATION For additional copies of this report, the annual report on form 20-F as filed with the United States Securities and Exchange Commission, for quarterly reports or for further information, please contact Investor Relations. BY MAIL: Biovail Corporation 2488 Dunwin Drive Mississauga, Ontario Canada L5L 1J9
BY PHONE: BY FAX: --------- ------- (416) 285-6000 (416) 285-6499
BY E-MAIL: BY WEB: ---------- ------- ir@biovail.com www.biovail.com
THE FOLLOWING WORDS AND LOGOS ARE TRADEMARKS FOR THE COMPANY AND MAY BE REGISTERED IN CANADA, THE UNITED STATES AND CERTAIN OTHER JURISDICTIONS: BIOVAIL, TIAZAC-REGISTERED TRADEMARK-, VIAZEM, CEFORM-REGISTERED TRADEMARK-, FLASH DOSE-REGISTERED TRADEMARK-, SHEARFORM-REGISTERED TRADEMARK- AND CRYSTAAL. TO THE EXTENT ANY STATEMENTS MADE IN THIS REPORT CONTAINS INFORMATION THAT IS NOT HISTORICAL, THESE STATEMENTS ARE ESSENTIALLY FORWARD-LOOKING. AS SUCH, THEY ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING THE DIFFICULTY OF PREDICTING FDA AND TTP APPROVALS, ACCEPTANCE AND DEMAND FOR NEW PHARMACEUTICAL PRODUCTS, THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING, NEW PRODUCT DEVELOPMENT AND LAUNCH, RELIANCE ON KEY STRATEGIC ALLIANCES, AVAILABILITY OF RAW MATERIALS, THE REGULATORY ENVIRONMENT, FLUCTUATIONS IN OPERATING RESULTS AND OTHER RISKS DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND CANADIAN SECURITIES AUTHORITIES. [biovail logo] 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9 Tel (416) 285-6000 Fax (416) 285-6499