Biovail readies for vital meeting with FDA
Biovail Corp. is set to meet with the U.S. Federal Drug Administration next week to try to persuade the agency to reverse a decision that has set back the development of a key drug in the company’s pipeline of new products.
The company was “shocked” and “very disappointed” last month when the FDA rejected one of its studies on its formulation of bupropion, a key component of a new antidepressant, Biovail chief executive officer Douglas Squires told analysts on a conference call yesterday.
At the meeting next Tuesday, Biovail will try to get the approval process for the bupropion salt back on track.
Biovail was counting on revenue from the new drug to help it counter the decline in revenue from Wellbutrin XL, which accounts for a substantial portion of its revenue. The time-release antidepressant is now facing competition from generic knockoffs in the 300-milligram dosage. Generic versions of the 150-milligram dose will come on the market in 2008.
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In its second-quarter financial report released yesterday, Biovail said revenue from Wellbutrin XL fell by more than half to $54-million (U.S.), compared with $114-million in the same period a year earlier.
That drop contributed to a 20-per-cent decrease in overall revenue in the quarter, and a 21-per-cent decline in profit.
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When Biovail announced the problems with FDA approval of the bupropion salt on July 20, its stock declined by about 20 per cent to slip below $22 (Canadian) on the Toronto Stock Exchange. It has fallen even further since then.
Mr. Squires said yesterday that he hopes investors will regain confidence in the firm when they realize how many potentially successful products it has in development.
“As investors begin to appreciate what’s in the pipeline … I think they will begin to have confidence in what we have and in the growth of the company.”
Among those new products is the company’s first foray into drugs that treat sexual dysfunction. Biovail said yesterday it has signed a licensing agreement with a privately held drug development firm that will give it exclusive global rights for a “novel product” to treat sexual dysfunction.
While Biovail is reluctant to release many details of the new project because of competitive concerns, Mr. Squires said the move could be very important to the company. “This is a very large marketplace and a significant unmet medical need.”
Because the drug has “some significant intellectual property wrapped around the product,” it could have a longer life in the market than some of Biovail’s past products, he said.
As for the bupropion salt, “we know the product will eventually be approved,” he said, if Biovail agrees to conduct the extra study that the FDA wants. “The difficulty is that it takes time.”
While the bupropion salt is important in itself, it is also a “scaffold” product that will be used as a component of another combination of products that includes an antidepressant.
Analyst Claude Camiré of Paradigm Capital in Toronto said he thinks Biovail’s new products will eventually kick-start its stock, but perhaps not for another year.
“The pipeline is there, but revenue growth won’t kick in until the second half of 2008,” he said.
Investors may continue to flee the company in the short run, Mr. Camiré said. But he’s confident that Biovail’s balance sheet, with its strong cash flow, can sustain the company until growth resumes.