Biovail Reports Third-Quarter 2007 Financial Results

Business Wire, Nov 8, 2007

Third-Quarter 2007 Revenues of $189 Million;

Year-to-Date 2007 Revenues of $639 Million;

Third-Quarter 2007 Net Income of $66 Million; U.S. GAAP EPS of $0.41

TORONTO -- Biovail Corporation (NYSE:BVF)(TSX:BVF) today announced financial results for the three-month and nine-month periods ending September 30, 2007. To the extent that this news release contains forward-looking statements, investors are cautioned that these statements are based on the Company's current views, and actual outcomes are not certain. For more information, see the note on forward-looking information following the conference-call details at the end of this news release.

Total revenues for the three months ended September 30, 2007 were $188.9 million, compared with $282.3 million for the third quarter of 2006. Total revenues for the nine months ended September 30, 2007 were $638.9 million, compared with $760.1 million for the first nine months of 2006. In accordance with United States Generally Accepted Accounting Principles (GAAP), Biovail reported net income of $65.9 million in the third quarter of 2007, compared with a net loss of $60.1 million for the corresponding 2006 period. For the nine months ended September 30, 2007, net income was $227.5 million, compared with $93.7 million for the same period a year earlier. For the third quarter of 2007, Biovail reported GAAP earnings per share (EPS) of $0.41, versus a net loss per share of $0.37 for the third quarter of 2006. In the first nine months of 2007, GAAP EPS were $1.41, versus EPS of $0.59 for the first nine months of 2006.

Specific Items Affecting Third-Quarter Results

GAAP net income and EPS figures for the third quarter of 2007 were negatively impacted by a $2.1-million legal settlement and a $0.4-million equity loss related to an investment in Western Life Sciences Venture Fund (WLS), partially offset by $0.9 million in cost recoveries, primarily related to the December 2006 restructuring of the Company's U.S. operations. These items negatively impacted net income and EPS in the third quarter of 2007 by $1.6 million and $0.01, respectively. GAAP net income and EPS figures for the third quarter of 2006 were negatively impacted by a $147.0-million non-cash write-down of intangible assets, a $40.0-million charge related to a contract loss in the Wellbutrin XL[R] agreement with GlaxoSmithKline (GSK), a $6.8-million charge related to a lost-profits provision in the Company's agreement with Kos Pharmaceuticals, Inc. (Kos) pertaining to Cardizem[R] LA, and a $0.2-million equity loss related to the investment in WLS; partially offset by a $4.0-million gain related to the termination of the Athpharma agreement. These charges negatively impacted net income and EPS in the third quarter of 2006 by $190.0 million and $1.19, respectively.

Specific Items Affecting Year-To-Date Results

In addition to the items in the third quarter of 2007, Biovail incurred a charge of $1.5 million associated with the December 2006 restructuring of the Company's U.S. commercial operations, and a loss of $12.5 million on the extinguishment of the Company's Senior Subordinated Notes, which included a $7.9-million premium for the early redemption, and the write-off of $4.6 million in deferred financing and other associated costs. Biovail also recorded a $0.9-million equity loss in the first half of 2007 relating to the Company's investment in WLS. Offsetting these items was a $15.7-million gain associated with the April 2007 sale of a portion of the Company's interest in Ethypharm S.A., and a $1.6-million reversal in accrued contract-cost provisions, primarily related to the Wellbutrin XL[R] agreement as a result of additional sample purchases by GSK in the second quarter of 2007. These items had an aggregate positive impact to net income of $0.9 million, or $0.01 per share.

In addition to the items in the third quarter of 2006, GAAP net income and EPS for the first nine months of 2006 were negatively impacted by an initial $4.5-million, contract-cost provision related to the sample-supply allowance with GSK, and a $0.3-million equity loss in the first half of 2006 relating to the Company's investment in WLS. These items had an aggregate negative impact to net income of $194.8 million, or $1.22 per share.

"Biovail's third-quarter results reflect the impact of our December 2006 restructuring, and our ongoing efforts to reduce costs, and to maximize operational efficiencies across the organization," said Biovail Chief Executive Officer Dr. Douglas Squires. "However, our commitment to research and development is unwavering, and we will continue to invest heavily in our development pipeline. We are also exploring a number of acquisition opportunities to supplement Biovail's organic growth initiatives, and to better position the Company for long-term growth."

2007 Financial Performance

Product revenues for the third quarter of 2007 were $178.3 million, compared with $270.0 million in the third quarter of 2006, a decrease that primarily reflects lower revenues for Wellbutrin XL[R] as a result of generic competition. Product revenues for the nine months ended September 30, 2007 were $607.1 million, compared with $725.3 million for the nine months ended September 30, 2006. Excluding Wellbutrin XL[R], total product revenues were $439.1 million in the nine months ended September 30, 2007, a 4% increase compared with $423.0 million in the corresponding period in 2006.