Biovail Corp. (BVF)

Q1 2010 Earnings Call

May 6, 2010 08:30 am ET


Nelson Isabel - VP of IR & Corporate Communications

Bill Wells - CEO

Gilbert Godin - COO

Peggy Mulligan - CFO


Marc Goodman - UBS

Chris Schott - JPMorgan

David Amsellem - Piper Jaffray

Greg Gilbert - Bank of America

Tim Chiang - CRT Capital

David Steinberg - Deutsche Bank

Randall Stanicky - Goldman Sachs

Annabel Samimy - Thomas Weisel Partners

Hari Sambasivam - National Bank Financial

Bert Hazlett - BMO Capital Markets

Doug Miehm - RBC Capital Markets



Good morning ladies and gentlemen and welcome to the First Quarter 2010 Earnings Conference Call for Biovail Corporation. At this time all participants are in a listen-only mode. This conference call is being webcast on the worldwide web at (Operator s Instructions). As a reminder, a replay of the conference call will be available until 7:00 PM Eastern Daylight Time on Thursday, May 13, 2010 by dialing 416-695-5800 or 1-800-408-3053, using access code 2058403 followed by the pound sign.

On behalf of the speakers who follow, investors are cautioned that the presentations and responses to questions may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and which comprise forward-looking information under applicable Canadian Provincial Securities Laws.

For the purposes of this caution we refer to such statements as forward-looking statements. Forward-looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Forward-looking statements include, but are not limited to our goals, targets, strategies, intentions, plans, beliefs, estimates, expectations, outlooks, guidance and other statements which contain language such as likely, should, guidance, belief, anticipate, expect, intend, plan, will, may, target and other similar expressions.

For additional information about the material factors or assumptions underlying such statements and about the material factors that may cause actual results to vary from those expressed or implied in such statements, please consult the company s earnings press release dated May 6, 2010, and available on the company website as well as its filings with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators, including the risk factors detailed in its most recent Form 10-K. The company does not undertake to update any forward-looking statements except as required by law.

At this point, I would like to turn the call over to Nelson Isabel, Vice President, Investor Relations and Corporate Communications for Biovail Corporation. Mr. Isabel will moderate today s call.

Nelson Isabel

Thank you operator and good morning everyone. On the behalf of Biovail, thank you for joining us. On this morning s call, Biovail management will describe the progress made to date with respect to the company s new strategy, as well as discuss the financial and operating highlights for the first quarter of 2010.

Joining us in today s conference call are Bill Wells, Chief Executive Officer of Biovail Corporation, Gilbert Godin, Biovail s Chief Operating Officer and Peggy Mulligan, Chief Financial Officer. All will be available to participate during the question and answer session with research analysts immediately following our remarks. We ll try to get to as many questions as possible while limiting the call to approximately one hour. Other participants are encouraged to follow-up with the company after this morning s call by calling 905-286-3000 and asking for Investor Relations. Bill, please go ahead.

Bill Wells

Thanks Nelson. Good morning everyone. Biovail delivered solid financial results with a 27% increase in revenues and adjusted cash EPS quarter-on-quarter. We also closed two new business development deals in specialty CNS in the first quarter. We have maintained the momentum from 2009 and made further progress implementing our business strategy which we believe will move Biovail to high growth. It was almost two years ago that we launched our new specialty CNS strategy and we are well ahead of where we thought we would be at this point.

We have now completed eight transactions that in aggregate improved both the near term and long-term outlook of the company. Our business development success has allowed us to become incredible and desirable partner for emerging pharma companies with development stage assets in CNS.

The number of interesting programs that we have already brought into our pipeline in conjunction with the many opportunities that are still available to us clearly validates our selection of specialty CNS as our initial target therapeutic area of focus. Our first transaction of 2010 acquiring the Canadian and US license rights for Staccato loxapine enables the deployment of a specialty sales force an important element of our long-term strategy. This allows for retention of a greater share of the economics of our products, and provides more control over branding, marketing and pricing. When fully leveraged which we expect within a couple of years. The sales force should provide the opportunity for very attractive financial returns.

Staccato loxapine is a product that we are very excited about. Depending on the outcome of the FDA review we expect a loss to product late in the first quarter of 2011. Our current plans are to establish a hospital-based sales force of approximately 60 to 100 reps. Although we would likely not hire the actual reps until after FDA approval, we will be incurring pre-launch costs in 2010.

Having rewind our plans over the past couple of months, we now expect these costs to be approximately $10 million this year. We believe that at maturity Staccato loxapine alone is sufficient to absorb the operating expenses of the sales force. However, we do intend to in-license or acquire additional specialty psychiatry products to better leverage the associated infrastructure costs. We are working on several of these.

In addition several of our current pipeline opportunities fit nicely with Staccato loxapine, such as pimavanserin in combination with risperidone in schizophrenia. And further down the road from our hospital sales perspective CX717 for the treatment of respiratory depression.

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