The Five Dumbest Things on Wall Street This Week

2. Salt in Biovail's Wounds

Biovail (BVF Quote) investors are feeling blue.

Shares of the Canadian generic drugmaker plunged 20% in a day after U.S. regulators rejected its latest twist on a popular antidepressant.

The Food and Drug Administration sent Biovail a nonapproval letter covering BVF-033, a drug candidate based on bupropion -- the active ingredient in Glaxo's (GSK Quote) Wellbutrin.

Biovail had high hopes for the new drug. In a May earnings release, Biovail said that "with an FDA action date for BVF-033 in July and a maturing development pipeline, Biovail is entering a new-product cycle that should drive long-term growth for the company."

But that cycle is now on hold. The FDA told Biovail it had questions about "the design of the pharmacokinetic studies" used in the drug application.

Questions about Biovail and Wellbutrin are nothing new. In May, the staff of the Securities and Exchange Commission told Biovail to expect a civil suit over issues including the company's handling of a fall 2003 earnings warning.

Biovail blamed the shortfall on a truck crash, claiming the accident was responsible for the loss of $10 million to $20 million in Wellbutrin XL sales. But as TheStreet.com's Adam Feuerstein reported, the truck was mostly empty -- with the real value of the cargo likely more in the $2 million to $4 million range. Biovail says it is cooperating with the SEC.

Biovail is also cooperating with the FDA to iron out issues tied to BVF-033. Back in May, the company said in a regulatory filing that it believes the drug "may provide unique safety benefits," due to its "new salt formulation."

It pays to take everything Biovail says with a grain of salt.

Dumb-o-Meter score: 88. The FDA setback comes just a month after Canadian regulators barred Biovail founder Eugene Melnyk from serving as a director.