Biovail Acquires Pharma PASS Companies for $190 Million

Business Wire, Dec 11, 2002

Business Editors/Health and Medical Writers

TORONTO--(BUSINESS WIRE)--Dec. 11, 2002

Biovail Corporation (NYSE:BVF)(TSE:BVF)

-- Expands Biovail's pipeline through the acquisition of numerous ongoing development programs

-- Acquisition provides complementary drug delivery technologies and strengthens patent portfolio

-- Acquisition includes an economic interest in a number of products; including generic Prilosec(R)

Biovail Corporation (NYSE:BVF)(TSE:BVF) announced today that it has acquired Pharma PASS LLC, an Irvine, California company, and Pharma PASS SA, a company based in France, both of which belong to the Pharma PASS group (Pharma PASS). Pharma PASS is a developer of advanced oral controlled release technologies and formulations that have been licensed to pharmaceutical companies in Europe and the United States. Both companies were purchased for approximately $190 million. The acquisition significantly enhances Biovail's portfolio of drug delivery technologies as well as Biovail's patent portfolio estate.

"This is an exciting and very strategic acquisition for Biovail," commented Eugene Melnyk, Chairman and Chief Executive Officer of Biovail. "Pharma PASS is headed by its principal owner, Dr. Pawan Seth who is a highly prolific developer of controlled release technologies and has been a long-standing developmental partner of Biovail. With this transaction, we have acquired not only a novel advanced drug delivery platform and two exciting enhanced absorption formulations, but have also significantly expanded Biovail's pipeline potential with numerous product development programs targeting commercialization in 2005 to 2007."

As part of this transaction, Biovail has acquired a number of New Drug Application (NDA) products under development, including an enhanced absorption fenofibrate product, for treatment of hypercholesterolemia, and an enhanced absorption venlafaxine product, for the treatment of depression. Biovail believes that improvements in the absorption and delivery of these molecules can significantly enhance the performance of these compounds and create marketing opportunities for Biovail or potential partners. Currently marketed versions of these products include Tricor(R) (fenofibrate), marketed in the United States by Abbott Laboratories with current annualized sales of $421 million and Effexor(R) (venlafaxine), marketed in the United States by Wyeth Pharmaceuticals with current annualized sales of $1.6 billion. A substantial portion of the acquisition price is attributable to these and other ongoing developmental programs. As a result, Biovail will take a one-time in process Research and Development charge related to the value of these developmental programs in the fourth quarter 2002.

Biovail is also acquiring an immediate, material economic interest in two licensed products including the currently marketed Tricor(R) (mentioned above) and a recently launched generic version of Prilosec(R) (omeprazole), which is licensed to Kremers Urban Development Company (KUDCo). Pharma PASS, the inventor and developer of this product, developed the only generic version of Prilosec(R) found not to infringe the original product's patent. Also, through this acquisition, Biovail extinguishes any future financial obligations to Pharma PASS in respect of product development services previously provided by Pharma PASS in collaboration with Biovail.

This transaction also provides Biovail with two new drug delivery technologies -- a Zero Order Release System (ZORS), a technology that controls the rate and release of a drug and/or significantly enhances the systemic absorption of a drug molecule, and an oral Colonic Drug Delivery technology designed for the targeted release of medication into the lower intestine and upper colon. Biovail and Dr. Seth intend to continue to develop novel products utilizing both of these technologies.

Biovail also confirmed its intention to launch its novel once daily version of diltiazem, Cardizem(R) LA (previously referred to as Cardizem(R) XL), upon Final Approval by the Food and Drug Administration (FDA) in the near term. Although the timing of such approval from the FDA is expected in the coming weeks, it is difficult to predict with any certainty the exact date of such approval. Biovail's recently announced arrangement with Reliant Pharmaceuticals LLP, in addition to Biovail's internally expanded sales force, provides over 800 experienced field sales representatives to begin detailing Cardizem(R) LA in the first quarter of 2003 as expected.

The Pharma PASS acquisition was initiated by Biovail Ventures, a division of Biovail with a mandate to expand Biovail's product pipeline by identifying and investing in New Chemical Entities (NCEs), New Biological Entities (NBEs) and novel drug delivery technologies for future commercialization in North America through Biovail's fully-integrated sales and marketing organization. Biovail Corporation is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration, manufacture, sale and promotion of pharmaceutical products utilizing advanced drug delivery technologies.