SEC Investigating Biovail

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Canadian drugmaker Biovail(BVF) said tonight that the Securities and Exchange Commission has launched an informal investigation into its "accounting and financial reporting practices."

The inquiry covers fiscal year 2002 and the quarterly periods to date for 2002, the company said in a statement.

Toronto-based Biovail, Canada's largest publicly traded drugmaker, has been a volatile stock of late. On Oct. 30, the company reported third-quarter earnings well below its own lowered expectations, and significantly cut its profit guidance for the fourth quarter and for 2004.

The drugmaker was forced to lower expectations for the third quarter in part because of an Oct. 1 traffic accident that damaged one of its delivery trucks shipping the antidepressant Wellbutrin XL. But how much drug was actually on the truck?

Biovail said the truck contained between $10 million and $20 million of Wellbutrin XL and that 60% was salvageable. But Banc of America Securities drug analyst David Maris, who conducted his own analysis, believed the truck carried far less drug, raising questions of whether Biovail was misleading investors. Maris has a sell rating on Biovail and his firm has no banking relationship with the company.

Among the documents the SEC has asked Biovail to preserve for the inquiry are "all invoices, all bills of lading and packing slips, all documents related to shipments of goods," according to the SEC letter sent to Biovail, made available by the company on its web site.

During Thursday's regular session, Biovail shares closed down 17 cents to $23.22. The stock fell another 4% to $22.32 in after-hours trading.

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