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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13A - 16 AND 15D - 16
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1999 COMMISSION FILE NUMBER 001-11145
BIOVAIL CORPORATION INTERNATIONAL
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
2488 DUNWIN DRIVE, MISSISSAUGA, ONTARIO L5L 1J9, CANADA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (416) 285-6000
INDICATE BY CHECK MARK WHETHER THE REGISTRANT FILES OR WILL FILE
ANNUAL REPORTS UNDER COVER OF FORM 20-F OR FORM 40-F
FORM 20-F X FORM 40-F
--- ---
INDICATE BY CHECK MARK WHETHER FOR REGISTRANT BY FURNISHING THE INFORMATION
CONTAINED IN THIS FORM IS ALSO THEREBY FURNISHING THE INFORMATION TO THE
COMMISSION PURSUANT TO RULE 12G 3-2 (B) UNDER THE SECURITIES EXCHANGE ACT OF
1934.
YES NO X
--- ---
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BIOVAIL CORPORATION INTERNATIONAL
QUARTERLY REPORT
INDEX
<TABLE>
<S> <C>
PART 1. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 1999 AND
DECEMBER 31, 1998............................................. 3
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS AND THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998......... 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.......................... 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS .................................... 14
PART II. OTHER INFORMATION.......................................... 20
</TABLE>
(ALL DOLLAR AMOUNTS IN THIS DOCUMENT ARE EXPRESSED IN U.S. DOLLARS UNLESS
OTHERWISE STATED.)
2
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BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT
Cash and short-term deposits $ 22,938 $ 78,279
Accounts receivable 48,060 42,768
Inventories 14,053 10,542
Executive stock purchase plan loans (Note 2) 2,320 2,924
Deposits and prepaid expenses 3,425 3,357
---------- ----------
90,796 137,870
LONG-TERM INVESTMENTS (Note 3) 10,055 10,055
INVESTMENT IN FUISZ TECHNOLOGIES LTD. (Note 4) 77,118 -
CAPITAL ASSETS, net 26,930 23,677
OTHER ASSETS, net 28,574 28,317
---------- ----------
$ 233,473 $ 199,919
========== ==========
LIABILITIES
CURRENT
Accounts payable $ 17,013 $ 12,244
Accrued liabilities 8,163 4,129
Income taxes payable 2,007 1,004
Customer prepayments 17,443 4,516
Current portion of long-term debt 747 653
---------- ----------
45,373 22,546
LONG-TERM DEBT 125,478 126,182
---------- ----------
170,851 148,728
---------- ----------
SHAREHOLDERS' EQUITY
Share capital (Note 5) 21,797 19,428
Warrants 8,244 8,244
Retained earnings 32,275 24,748
Cumulative translation adjustment 306 (1,229)
---------- ----------
62,622 51,191
---------- ----------
$ 233,473 $ 199,919
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENTS OF INCOME
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE
EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE
Product sales $ 28,730 $ 16,540 $ 66,271 $ 45,303
Research and development 12,240 8,974 27,592 20,927
Royalty and licensing 4,637 3,476 16,139 9,905
------------- ------------- ------------- -------------
45,607 28,990 110,002 76,135
------------- ------------- ------------- -------------
EXPENSES
Cost of goods sold 8,946 6,946 21,833 18,956
Research and development 7,699 4,047 19,482 12,179
Selling, general and administrative 7,678 4,067 20,282 12,521
------------- ------------- ------------- -------------
24,323 15,060 61,597 43,656
------------- ------------- ------------- -------------
OPERATING INCOME
21,284 13,930 48,405 32,479
EQUITY IN LOSS OF
FUISZ TECHNOLOGIES LTD. (Note 4) (361) - (361) -
INTEREST EXPENSE, net (2,722) (97) (8,171) (254)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 18,201 13,833 39,873 32,225
PROVISION FOR INCOME TAXES 1,062 629 2,370 1,629
------------- ------------- ------------- -------------
NET INCOME $ 17,139 $ 13,204 $ 37,503 $ 30,596
============= ============= ============= =============
EARNINGS PER SHARE (Note 6) $ 0.70 $ 0.49 $ 1.53 $ 1.14
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 24,451,000 26,899,000 24,451,000 26,899,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
---- ----
<S> <C> <C>
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING ACTIVITIES
OPERATING
Net income for the period $ 37,503 $ 30,596
Depreciation and amortization 4,960 3,534
Equity in loss of Fuisz Technologies Ltd. (Note 4) 361 -
--------- ---------
42,824 34,130
Changes in non-cash operating items 14,278 (805)
--------- ---------
57,102 33,325
--------- ---------
INVESTING
Additions to capital assets, net (5,281) (2,505)
Executive stock purchase plan loans (Note 2) 719 66
Acquisition of product rights (2,203) -
Investment in Fuisz Technologies Ltd. (Note 4) (77,479) -
Acquisition of long-term investments - (10,000)
Acquisition of royalty interest - (15,000)
Increase in other assets - (4,165)
--------- ---------
(84,244) (31,604)
--------- ---------
FINANCING
Acquisition of share capital (30,593) (22,598)
Issuance of share capital 2,985 3,776
Reduction in other long-term debt (667) (8,455)
Increase in other long-term debt - 19,141
--------- ---------
(28,275) (8,136)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 76 (19)
--------- ---------
DECREASE IN CASH (55,341) (6,434)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 78,279 8,275
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 22,938 $ 1,841
========= =========
REPRESENTED BY:
Cash and short-term deposits $ 22,938 $ 11,892
Bank indebtedness - (10,051)
========= =========
$ 22,938 $ 1,841
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED
IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Biovail Corporation International (the "Company"), was amalgamated
effective March 29, 1994, under the laws of the province of Ontario. The
Company's accounting and reporting policies conform to generally accepted
accounting principles in Canada. There were no material differences between
generally accepted accounting principles in Canada and generally accepted
accounting principles in the United States in the reporting periods except
for those described in Note 9.
1998 FIGURES
Certain of the 1998 figures have been reclassified to conform to the 1999
presentation.
For a full description of the other accounting policies of the Company,
reference is made to the Annual Report on Form 20-F for the year ended
December 31, 1998.
In the opinion of management, all adjustments necessary for a fair
presentation of the financial position, results of operations and cash
flows for the period presented have been made and all such adjustments are
of a normal recurring nature.
2. EXECUTIVE STOCK PURCHASE PLAN LOANS
Executive Stock Purchase Plan ("ESPP") loans, of $2,320,014 at September
30, 1999, were made to finance the acquisition of shares of the Company on
the open market by executive officers. The loans are secured by shares of
the Company owned by the executive officers and bear interest at 1/4% over
the bank prime rate, which is equal to the Company's rate for borrowing.
The loans and all outstanding interest were repaid to the Company in
October 1999.
3. LONG-TERM INVESTMENTS
In March, 1998, the Company made a $7,543,127 investment in a marketable
securities fund. The investment is carried at cost, less provision to
recognize any decline in value that is other than temporary. The fair value
of the investment at September 30, 1999 was $5,751,523.
In July, 1998, in connection with the acquisition from Celgene Corporation
("Celgene") of Canadian marketing and distribution rights in respect to
immediate release and pulse release formulations of products containing
d-methylphenidate hydrochloride, the Company made a $2,500,000 investment
in common shares of Celgene, the supplier of the product. The fair value of
the investment at September 30, 1999 was $5,404,057.
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4. INVESTMENT IN FUISZ TECHNOLOGIES LTD.
The Company entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of July 25, 1999 with Fuisz Technologies Ltd.
("Fuisz"). Pursuant to the terms of the Merger Agreement, the Company and
Fuisz agreed to enter a two-stage transaction consisting of cash and stock
that valued Fuisz's shares at $7 per share.
Prior to the entering into of the Merger Agreement, the Company had entered
into agreements to acquire the beneficial ownership of 4,209,829 common
shares of Fuisz for $29,468,803. On September 3, 1999, the Company
completed the first stage of the Merger Agreement by accepting for payment
an additional 6,585,225 common shares of Fuisz for cash of $46,096,575. As
at September 30, 1999, the Company had paid cash of $68,565,378 and accrued
$7,000,000 for payment of 10,795,054 Fuisz common shares which represents
approximately 49% of the outstanding shares of Fuisz at September 30, 1999.
At September 30, 1999, the investment in Fuisz account is comprised of the
cost of the shares of Fuisz of $75,565,378 together with the estimated
costs of acquiring these shares of $1,913,500 offset by the Company's share
of the results of Fuisz for the period from September 3, 1999 accounted for
on the equity basis. The cost of acquisition has been allocated to the
Company's share of Fuisz's identifiable net assets on the basis of the
estimated fair values at the date of purchase. The excess of the fair value
of the assets acquired over the underlying net assets is being amortized
over the estimated useful lives of the assets acquired and is included in
the equity in loss of Fuisz account. Accumulated amortization at September
30, 1999 amounted to $300,487.
The allocation of purchase price in excess of fair value of net tangible
assets acquired represents estimates based upon preliminary information and
analysis. The Company has retained an independent third party to complete a
formal valuation of the purchased in-process research and development and
other intangible assets acquired in the purchase. The Company is also
currently reviewing divesting of a portions of the assets acquired and have
allocated values to these assets on a preliminary basis. The allocation of
the these amounts in the purchase price are subject to adjustment following
the completion of this process.
5. SHARE CAPITAL
From January 1, 1999 to September 30, 1999, in accordance with the
Company's stock repurchase program, the Company has repurchased an
additional 732,700 common shares at a cost of $30,592,796. The excess of
the cost of the common shares acquired over the stated capital thereof,
totaling $29,976,417 has been charged to retained earnings.
6. EARNINGS PER SHARE
Earnings per share, for all interim periods presented have been calculated
using the weighted number of shares outstanding during the year. The
earnings per share on a fully
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diluted basis giving effect to the exercise of all options and warrants
granted would have been $0.62 and $0.47 for the three months ended
September 30, 1999 and 1998 respectively and $1.38 and $1.08 for the nine
months ended September 30, 1999 and 1998 respectively.
7. LITIGATION
From time to time, the Company becomes involved in various legal
proceedings which it considers to be in the ordinary course of business.
The vast majority of these proceedings involve intellectual property issues
that often result in patent infringement suits brought by patent holders
upon the Company's filing of its ANDA applications. The timing of these
actions is mandated by statute and may result in a delay of FDA's approval
for such filed ANDAs until the final resolution of such actions or the
expiry of 30 months, whichever occurs earlier. The Company is currently
litigating a number of such actions and the Company is vigorously defending
these suits by denying infringement of the patents and has or will be
asserting counterclaims seeking damages for violation of the anti-trust
laws of the U.S. and for tortious interference with the Company's
prospective business advantage. While the Company is not currently able to
determine the potential liability, if any, related to such matters, the
Company believes none of the matters, individually or in aggregate, will
have a material adverse effect on its financial position, results of
operations or cash flows.
8. SEGMENTED INFORMATION AND MAJOR CUSTOMERS
The Company's operations consist of three segments - Product Sales,
Research and Development, and Royalty and Licensing. The segments are
determined based on several factors including customer base, the nature of
the product or service provided, delivery channels and other factors.
The PRODUCT SALES segment covers sales of production from the Company's
Puerto Rico and Steinbach, Manitoba, facilities and sales by the Crystaal
Division.
The RESEARCH AND DEVELOPMENT segment covers all revenues generated by the
Company's integrated research and development facilities, and comprises
research and development services provided to third parties, including
Intelligent Polymers Limited, and product development milestone fees.
The ROYALTY AND LICENSING segment covers royalty revenues received from
licensees in respect of products for which the Company has manufacturing,
marketing and/or intellectual property rights and product or technology
licensing fees.
8
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The following table sets forth information regarding segment operating
income:
<TABLE>
<CAPTION>
RESEARCH ROYALTY
NINE MONTHS ENDED PRODUCT AND AND
SEPTEMBER 30, 1999 SALES DEVELOPMENT LICENSING TOTAL
------------------ ----- ----------- --------- -----
<S> <C> <C> <C> <C>
Revenues from external
customers $ 66,271 $ 27,592 $ 16,139 $ 110,002
--------- --------- --------- ---------
Segment operating
income 30,255 6,590 15,928 52,773
Unallocated amounts
Selling, general and
administrative expenses
Equity in loss of Fuisz Technologies Ltd. (4,368)
Interest expense, net (361)
(8,171)
---------
Income before income taxes $ 39,873
=========
</TABLE>
<TABLE>
<CAPTION>
RESEARCH ROYALTY
NINE MONTHS ENDED PRODUCT AND AND
SEPTEMBER 30, 1998 SALES DEVELOPMENT LICENSING TOTAL
------------------ ----- ----------- --------- -----
<S> <C> <C> <C> <C>
Revenues from external
customers $ 45,303 $ 20,927 $ 9,905 $ 76,135
--------- --------- --------- ---------
Segment operating
income 17,797 7,363 9,711 34,871
Unallocated amounts
Selling, general and
administrative expenses (2,392)
Interest expense, net (254)
---------
Income before income taxes $ 32,225
=========
</TABLE>
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9. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in Canada ("Cdn. GAAP") which
differ in certain respects from those applicable in the United States
("U.S. GAAP"). The material differences as they apply to the Company's
financial statements are as follows:
a) Reconciliation of net income (loss) under Cdn. and U.S. GAAP
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1999 1998
---- ----
<S> <C> <C>
Net income under Cdn. GAAP........................... $ 37,503 $ 30,596
U.S GAAP adjustments:
Reversal of previously expensed product
launch advertising costs (i)............... 328 -
Collection of warrant subscription
receivable (ii)............................ (2,383) (958)
Compensation cost for employee stock
options (iii).............................. (1,350) (1,594)
Additional equity loss (iv)....................... (56,781) -
---------- ----------
Net income loss according to U.S. GAAP $ (22,683) $ 28,044
========== ==========
Earnings (loss) per share under U.S. GAAP
Basic........................................... $ (0.93) $ 1.04
Fully diluted................................... $ (0.93) $ 1.03
Weighted average number of common shares
outstanding under U.S. GAAP (000's)
Basic........................................... 24,451 26,889
Fully diluted................................... 25,417 27,239
</TABLE>
(i) For the purposes of reporting under U.S. GAAP, companies are required to
write off certain product launch and advertising costs incurred during the
year. This adjustment represents the portion of product launch and
advertising costs currently expensed under Cdn. GAAP which have been
previously written off under U.S. GAAP.
(ii) See Note 9 (c)
(iii) For the purposes of reporting under U.S. GAAP, the Company accounts for
compensation expense for certain employee stock option plans under the
provisions of Accounting Principles Board Opinion 25. No such expense is
required to be determined under Cdn. GAAP.
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(iv) The amount of equity loss attributable to the Company's investment in Fuisz
must also be adjusted for the differences between Canadian GAAP and U.S.
GAAP for Fuisz which are as follows:
<TABLE>
<S> <C>
Additional equity loss for in-process research and development (a) $56,835
Reduction in interest expense on convertible debentures (b) 54
-------
Incremental equity loss, U.S. GAAP $56,781
=======
</TABLE>
(a) For U.S. GAAP, the portion of the investment account attributable to
in-process research and development ("IPR&D") must be written off
immediately. Under Cdn. GAAP, the portion of the equity account
attributable to IPR&D of $57,120,168 has been capitalized and is being
amortized over its useful life of fifteen years. Under Cdn. GAAP, the
amortization of IPR&D for the period September 3, 1999 to September
30, 1999 was $285,601. The differential of $56,834,567 is reflected in
the reconciliation above. As described in Note 4, the value
attributable to the IPR&D is based on preliminary estimates and
analysis and is subject to change following the completion of the
valuation opinion by an independent third party.
(b) For U.S. GAAP, the value of the holder conversion option relating to
the convertible debentures of Fuisz is recorded as a component of the
underlying debt instrument. Under Cdn. GAAP, this value is recorded as
a permanent addition to shareholders' equity. This amount is amortized
on a yield basis to interest expense with a corresponding accretion in
the principal outstanding of long-term debt. The adjustment reflected
in the reconciliation above reverses the amortization of $53,690
included in the equity in loss of Fuisz account.
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b) Comprehensive income
Under U.S. GAAP, the following additional disclosure would be provided
pursuant to the requirements of SFAS No. 130 "Reporting Comprehensive
Income" which establishes standards for the reporting of comprehensive
income and its components:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
------------
Statement of comprehensive income (loss) 1999 1998
---- ----
<S> <C> <C>
Net income (loss) according to U.S. GAAP...................... $(22,683) $28,044
-------- -------
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment................... 1,535 (426)
Unrealized holding gain on long-term
investments............................................. 1,990 1,235
-------- -------
Other comprehensive income.................................... 3,525 809
-------- -------
Comprehensive income (loss) under U.S. GAAP................... $(19,158) $ 28,853
======== =======
</TABLE>
<TABLE>
<CAPTION>
Accumulated other
comprehensive
income (loss)
balances SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
---------------------------------------------- ---------------------------------------------
FOREIGN UNREALIZED GAINS FOREIGN UNREALIZED
CURRENCY (LOSSES) ON CURRENCY GAINS ON
TRANSLATION INVESTMENTS TOTAL TRANSLATION INVESTMENTS TOTAL
----------- ----------- ----- ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning
of period $ (1,229) $ (877) $ (2,106) $ (960) $ - $ (960)
Current year change 1,535 1,990 3,525 (426) $ 1,235 809
-------- --------- -------- -------- -------- -------
Balance, end
of period $ 306 $ 1,113 $ 1,419 $ (1,386) $ 1,235 $ (151)
======== ========= ======== ======== ======== =======
</TABLE>
c) The components of shareholders' equity under U.S. GAAP are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1999 1998
---- ----
<S> <C> <C>
Share capital........................................ $ 21,797 $ 19,428
Warrants............................................. 8,244 8,244
Warrants subscription receivable..................... (3,932) (6,315)
Retained earnings (deficit).......................... (26,548) 26,111
Other comprehensive income (loss) ................... 1,419 (2,106)
--------- --------
$ 980 $ 45,362
========= ========
</TABLE>
Under U.S. GAAP, the Company would record in paid-up capital an amount
equal to the proceeds attributable to Warrants as determined at the time of
their issuance along with an offsetting contra equity account, "Warrant
subscription receivable". Under Cdn. GAAP, the offsetting amount has been
recorded as a reduction in retained earnings.
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10. SUBSEQUENT EVENTS
a) Public Offering
On October 20, 1999, the Company completed a public offering of 5,000,000
common shares at $51 per share for gross proceeds of $255 million.
On October 22, 1999, the Company and certain directors and executive
officers of the Company completed the sale of an additional 750,000 common
shares of the Company pursuant to an over-allotment option granted to the
U.S. underwriters at a price of US$51 per share. Of the 750,000 additional
shares, 660,000 were sold by the selling shareholders and 90,000 of the
shares were sold by the Company. In addition, two of the selling
shareholders exercised existing options to obtain the shares sold by them.
The Company received additional gross proceeds of US$4,590,000 upon the
completion of the over-allotment sale.
b) Fuisz Technologies Ltd.
On November 12, 1999 the stockholders of Fuisz approved and adopted the
Merger Agreement. Under the terms of the Merger Agreement, each outstanding
share of Fuisz common stock not already owned by the Company was converted
into the right to receive .1197 of a share of the Company's common shares.
Based on this ratio, the Company issued approximately 1,500,000 common
shares.
As a result of the acquisition of the outstanding 51% of the common shares
of Fuisz, the Company anticipates incurring approximately an additional
$60,000,000 charge to income relating to in-process research and
development.
On October 25, 1999 Fuisz completed the sale of its German, French and
Italian subsidiaries to Shire Pharmaceuticals Group plc for a gross
consideration of U.S. $39.5 million in cash.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN U.S. DOLLARS)
OVERVIEW
Biovail Corporation International ("Biovail" or the "Company") derives its
revenues from (i) developing and licensing oral controlled release products
using its proprietary drug delivery technologies; (ii) manufacturing such
products for sale to licensees and wholesalers; and (iii) providing
pharmaceutical contract research services to third parties.
RESULTS OF OPERATIONS
Comparison of nine months ended September 30, 1999 and September 30, 1998
Revenue for the first nine months of 1999 was $110.0 million compared to $76.1
million in the comparable period in 1998. The increase was primarily due to
increases in product sales, third party research and development revenue and
royalty and licensing revenues. Net income increased to $37.5 million or $1.53
per share in the first nine months of 1999 from $30.6 million or $1.14 per share
in the comparable period in 1998. Earnings per share have been calculated using
the weighted average number of common shares outstanding during the period.
REVENUE
Product sales were $66.3 million for the first nine months of 1999 as compared
to $45.3 million in the comparable period in 1998. In 1999, revenues were
generated primarily on sales of Tiazac(R) to Forest Laboratories ("Forest") for
the U.S. market, Canadian market sales of Tiazac(R) by the Company's Crystaal
Division ("Crystaal") and the product launch shipments of the Company's generic
version of Verelan and Crystaal's launch of Brexidol, Retavase, Celexa and
Cardiac STATus(TM).
Research and development revenue was $27.6 million in the first nine months of
1999, as compared to $20.9 million in the comparable period in 1998. The
increase was primarily due to a record level of contract development activity
for third parties at the Company's Contract Research Division and research and
development work relating to the development of branded products on behalf of
Intelligent Polymers Limited ("IPL").
Net royalty and licensing revenue was $16.1 million in the first nine months of
1999, as compared to $9.9 million in the comparable period in 1998. The increase
is primarily a result of increased royalty revenues from sales of Tiazac(R) in
the U.S. market and product licensing fees received in the first quarter of 1999
related to the Company's agreement with Mylan with respect to Verelan, offset by
lower royalties received from the sales of Oruvail due to the impact of generic
competition.
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<PAGE> 15
COST OF GOODS SOLD AND GROSS MARGINS
The cost of goods sold as a percentage of product sales decreased to 33% in the
first nine months of 1999 as compared to 42% in the comparable period in 1998.
Gross margins in 1999 on product sales for the first nine months were 67% as
compared to 58% for the first nine months of 1998. The Company's gross margins
are impacted by product sales price, product mix, manufacturing volumes and
manufacturing costs. The increase in gross margins was due to the impact of
higher margin contributions from Crystaal product sales, the impact of new
products and a higher level of Tiazac(R) trade product shipments.
RESEARCH AND DEVELOPMENT
Research and development expenses were $19.5 million for the first nine months
of 1999 as compared to $12.2 million in the comparable period in 1998. The
increased spending reflected the increased level of activity related to the
development of NDA products for IPL, work related to the development of ANDA
products and additional third party work done at our Contract Research Division.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses were $20.3 million in the first
nine months of 1999 compared to $12.5 million in the comparable period in 1998.
The increase was due to increased levels of activity at our Crystaal operation
requiring an expansion of the existing sales force and higher advertising and
promotion expenditures associated with the launch of Retavase, Brexidol, Celexa
and Cardiac STATus(TM) and a higher level of corporate activities.
OPERATING INCOME
Operating income increased to $48.4 million for the first nine months of 1999
compared to $32.5 million for the comparable period in 1998. Segment operating
income for the first nine months of 1999, before unallocated selling, general
and administrative expenses, was $52.8 million compared to $34.9 million in
1998. Of the 1999 total, product sales accounted for $30.3 million compared to
$17.8 million in the previous year. This income relates primarily to the
increased Tiazac(R) sales and the impact of new product launches for the
Canadian market. The research and development segment accounted for $6.6 million
in 1999 compared to $7.4 million in 1998, which included contribution to margins
in respect of milestones attained under the Teva Pharmaceutical development
agreement. Royalty and licensing activities generated segment operating income
of $15.9 million in 1999, compared with $9.7 million in 1998. This increase
primarily relates to higher Tiazac(R) royalties and the licensing agreement with
Mylan with respect to Verelan.
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INTEREST
Net interest expense was $8.2 million in the first nine months of 1999 compared
to $254,000 in 1998. The increase was primarily due to the interest expense
associated with the $125 million U.S. Dollar Senior Notes bearing interest at
10 7/8%, which the Company issued in November, 1998.
INCOME TAXES
Income taxes in the first nine months of 1999 were $2.4 million compared to $1.6
million in 1998. The Company's tax provision is reflective of the geographic
sources of income at the appropriate rates within each tax jurisdiction. The
benefit of tax losses in the Canadian entity has not been recognized for
accounting purposes.
NET INCOME
Net income increased by 22.6% to $37.5 million for the first nine months of 1999
as compared to $30.6 million in the comparable period in 1998.
EBITDA
For the reasons set forth above EBITDA, which is defined as earnings before
interest, taxes, depreciation and amortization, increased by $17.0 million or
47.2% to $53.0 million for the first nine months of 1999 from $36.0 million in
the comparable period in 1998. The ratio of total debt at September 30, 1999 to
EBITDA for the nine months ended September 30, 1999 was 2.4:1 compared to 0.4:1
in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and short-term deposits of $22.9 million at September 30,
1999, as compared to $78.3 million at December 31, 1998. At September 30, 1999,
working capital was $45.4 million compared to $115.3 million at December 31,
1998, which represented a working capital ratio of 2.0:1 as compared to 6.1:1,
respectively.
Cash flow from operating activities (after adding back non-cash charges) was
$57.1 million for the first nine months of 1999 as compared to $33.3 million in
the comparable period in 1998. Cash requirements for non-cash operating items
decreased for the first nine months of 1999 and were primarily attributable to
increases in accounts payable and accrued liabilities and in customer
prepayments offset by an increase in accounts receivable.
Investing activities in the first nine months of 1999 totaled $84.2 million and
related primarily to the investment in Fuisz Technologies Ltd. ("Fuisz") of
$77.5 million and capital asset additions of $5.3 million. In the comparable
period in 1998, investing activities totaled $31.6 million of which the majority
related to the acquisition of the royalty interest from Galephar of $15 million
and long-term investments of $10.0 million.
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Net cash used in financing activities was $28.3 million for the first nine
months of 1999 as compared to $8.1 million in the comparable period in 1998. The
cash utilization for the first nine months of 1999 reflects the repurchase of
common shares in the amount of $30.6 million, the repayment of long-term debt of
$667,000, offset in part by the issuance of share capital, primarily on the
exercise of stock options, of $3.0 million. In the comparable period in 1998,
cash utilization reflected the repurchase of common shares in the amount of
$22.6 million, offset in part by the issuance of share capital primarily on the
exercise of stock options of $3.8 million and a net increase in long term debt
of $10.7 million.
Exchange rate changes in foreign cash balances resulted in an increase in cash
of $76,000 in the first nine months of 1999 as compared to a reduction of cash
of $19,000 in the comparable period in 1998.
As a result of the foregoing, we had negative cash flow of $55.3 million for the
first nine months of 1999 compared to $6.4 million in 1998.
Total long-term debt (including current portions thereof) was $126.2 million as
at September 30, 1999 compared to $126.8 million at December 31, 1998 resulting
in a debt to equity ratio of 2.7:1 and 2.9:1, respectively. Long-term debt is
comprised of $125 million U.S. Senior Notes and the balance of a non-interest
bearing government loan.
We believe we have adequate capital and sources of financing to support our
existing ongoing operational requirements. As discussed below, the Company has
completed a merger agreement with Fuisz which has increased our cash
requirements. In order to finance these cash requirements and to support our
continued growth objectives we have completed a public offering, as discussed
below, which generated gross proceeds of $255 million. In addition, we have
established a new $25 million banking facility. There can be no assurance,
however, that these financial resources will be sufficient to sustain our
longer-term growth objectives.
We and our subsidiaries generate revenue and expenses primarily in U.S. and
Canadian dollars. In the first nine months of 1999, revenue was generated in the
following proportions: 87% in U.S. dollars, 13% in Canadian dollars. In
addition, expenses were incurred in the following proportions: 63% in U.S.
dollars, and 37% in Canadian dollars. We do not believe that our exposure to
foreign currency exchange risk is significant because of the relatively minor,
and diminishing, proportion of Canadian dollar to U.S. dollar denominated
transactions. We have not historically utilized foreign currency hedging
instruments.
Inflation has not had a material impact on the Company's operations.
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<PAGE> 18
ACQUISITION
As of November 12, 1999, we have completed the merger with Fuisz pursuant to the
terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of
July 25, 1999. The details of the purchase are described below:
On July 25, 1999, Biovail, Fuisz and ABCI Acquisition Sub. Corporation (the
"Purchaser"), a Delaware corporation and an indirect wholly-owned subsidiary of
Biovail, entered into the Merger Agreement pursuant to which Biovail agreed to
cause the Purchaser to promptly commence an offer (the "Offer") to purchase up
to 6,585,225 of the outstanding shares of common stock of Fuisz at a purchase
price of $7 per share, net to the seller in cash. The Purchaser and its
affiliates beneficially owned 4,209,829 of such shares. According to information
provided by Fuisz to the Purchaser, there were 22,030,723 shares of common stock
of Fuisz outstanding as of July 25,1999. Accordingly, by acquiring 6,585,225
shares of Fuisz pursuant to the Offer, Biovail and its affiliates would own,
beneficially, approximately 49% of the outstanding shares of Fuisz.
On September 3, 1999, pursuant to the terms of the Offer, Biovail and the
Purchaser accepted for payment 6,585,225 shares of common stock of Fuisz.
The Merger Agreement further provided, among other things, that, after the
purchase of the shares of Fuisz pursuant to the Offer and subject to the
satisfaction or waiver of certain conditions as set forth in the Merger
Agreement, including the receipt of Fuisz shareholder approval, the Purchaser
would merge with and into Fuisz (the "Merger"), with Fuisz surviving the Merger
as a wholly-owned subsidiary of Biovail.
On November 12, 1999, the shareholders of Fuisz approved and adopted the Merger
Agreement. Under the terms of the Merger Agreement, each outstanding share of
Fuisz common stock not already owned by Biovail was converted into the right to
receive .1197 of a share of Biovail common shares. Based on this ratio, Biovail
issued approximately 1,500,000 common shares.
We will account for this acquisition using the purchase method of accounting in
accordance with Canadian and U.S. GAAP.
PUBLIC OFFERING
On October 20, 1999, we completed a public offering of 5,000,000 common shares.
A total of 4,545,000 shares were sold in the U.S. and outside of Canada, and
455,000 shares were sold in Canada. Gross proceeds from this offer were $255
million. A portion of these proceeds will be used to purchase all of Fuisz's
outstanding 7% Convertible Subordinated Debentures, in the amount of $75 million
plus accrued and unpaid interest, which became payable upon the successful
completion of the Merger.
On October 22, 1999, the Company and certain directors and executive officers of
the Company completed the sale of an additional 750,000 common shares of the
Company pursuant to an over-allotment option granted to the U.S. underwriters at
a price of US$51 per share. Of the 750,000 additional shares, 660,000 were sold
by the selling shareholders and 90,000 of the shares were sold by the Company.
In addition, two of the selling shareholders exercised existing options to
obtain the shares sold by them. The Company received additional gross proceeds
of US$4,590,000 upon the completion of the over-allotment sale.
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YEAR 2000 COMPLIANCE
The Company's Year 2000 program is substantially complete. The total cost of the
Year 2000 project was estimated at $500,000 which is being funded through
operating cash flow. To date, we have incurred approximately $460,000, related
to assessment and remediation for our Year 2000 project and the development of a
contingency plan. Approximately 50% of all costs associated with the Year 2000
project have been capitalized and will be amortized in accordance with company
policy. The balance will be expensed as incurred.
We utilize enterprise resource planning systems in the operation of our core
business functions. In conjunction with third party consultants, substantial
efforts have been made to test all components of the enterprise resource
planning system for Year 2000 compliance. The evaluation of test results
indicate that there are no known Year 2000 issues.
We have identified and contacted key suppliers, partners and collaborators to
determine their stage of readiness for the Year 2000. Despite our best efforts,
risks of third party compliance are not directly within the Company's control
and are difficult to assess.
To avoid manufacturing operations disruptions and product quality issues through
failures of equipment or environmental systems, we have an inventory of all the
equipment and software applications that we use in our operations that could be
impacted in a material way by the Year 2000 issue. All equipment has been
assessed and there are no known Year 2000 issues.
The scope of our contingency plan in the event of Year 2000 difficulties
includes environmental systems, computer systems, manufacturing equipment and
the supply of goods and services. A contingency plan for each location within
the Company has been developed. A final review of these plans will occur in
December 1999.
The Company believes that it has taken the necessary steps to resolve the Year
2000 issues and does not anticipate that Year 2000 problems will have any
material impact on its operations. However, due to the general uncertainty
inherent in the Year 2000 conversion, particularly related to the readiness of
other parties, there can be no guarantees.
FORWARD-LOOKING STATEMENTS
To the extent any statements made in this report contains information that is
not historical, these statements are essentially forward-looking. As such,
they are subject to risks and uncertainties, including the difficulty of
predicting FDA and TPP approvals, acceptance and demand for new pharmaceutical
products, the impact of competitive products and pricing, new product
development and launch, reliance on key strategic alliances, availability of raw
materials, the regulatory environment, fluctuations in operating results and
other risks detailed from time to time in the Company's filings with the U.S.
Securities and Exchange Commission and Canadian securities authorities.
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BIOVAIL CORPORATION INTERNATIONAL
PART II - OTHER INFORMATION
1. OPERATIONAL INFORMATION
The press releases issued by the Company subsequent to the filing of SEC form
6-K on August 30, 1999 are attached as the following exhibits:
a) On September 3, 1999, the Company and Fuisz Technologies Ltd.
announced the results of the tender offer.
b) On September 21, 1999, the Company announced a public offering in
Canada and the United States.
c) On October 14, 1999, the Company announced it had acquired
exclusive marketing rights for the U.S. to Elan Corporation plc's
generic versions of Adalat CC.
d) On October 15, 1999, the Company announced its offering of
5,000,000 shares of common stock at U.S.$51.00 per share.
e) On October 20, 1999, the Company announced the completion of its
public offering of 5,000,000 common shares.
f) On October 25, 1999, the Company announced it had received
tentative approval in the U.S. from the FDA for its generic
versions of Cardizem CD.
g) On October 25, 1999, the Company and Fuisz Technologies Ltd.
announced the sale of the German, French and Italian subsidiaries
of Fuisz.
h) On October 28, 1999, the Company announced record 1999 third
quarter and year-to-date financial results.
i) On November 10, 1999, the Company announced the average share
price and expected exchange ratio for the Fuisz Technologies Ltd.
acquisition.
j) On November 12, 1999, the Company announced the Board of
Directors had approved the convening of a Special Shareholder
Meeting to authorize a 2-for-1 stock split of its common stock.
k) On November 12, 1999, the Company and Fuisz Technologies Ltd.
announced that the stockholders' of Fuisz had approved and
adopted the Agreement and Plan of Merger.
l) On November 16, 1999, the Company announced that it had received
notification that the Company would be added to the consumer
sector of the TSE 100 Index.
m) On November 17, 1999, the Company announced that its wholly-owned
subsidiary Biovail Technologies Ltd. (formerly Fuisz Technologies
Ltd.) had commenced an offer to purchase all of its outstanding
7% convertible subordinated debentures.
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2. LEGAL PROCEEDINGS
For detailed information concerning legal proceedings, reference is made to
Note 16 in the financial statement contained as part hereof and to the
Annual Report on Form-20F for the year ended December 31, 1998.
3. The material issued by the Company to shareholders are attached as the
following exhibits:
n) The 1999 Third Quarter Report to shareholders.
4. Reporting issued to Canadian Security Administrators and Stock Exchanges
are attached as the following exhibits:
o) Form 27 - Material Change Report dated August 10, 1999.
p) Form 27 - Material Change Report dated September 28, 1999.
q) Form 27 - Material Change Report dated October 22, 1999.
5. ADDITIONAL DEVELOPMENTS
EQUITY OFFERING
On October 20, 1999, the Company completed a public offering of
5,000,000 common shares at US$51 per share for gross proceeds of US$255 million
(the "Public Offering"). On October 22, 1999, the Company and certain directors
and executive officers of the Company completed the sale of an additional
750,000 common shares of the Company pursuant to an over-allotment option
granted to the U.S. underwriters at a price of US$51 per share. Of the 750,000
additional shares, 660,000 were sold by the selling shareholders and 90,000 of
the shares were sold by the Company. In addition, two of the selling
shareholders exercised existing options to obtain the shares sold by them. The
Company received additional gross proceeds of US$4,590,000 upon the completion
of the over-allotment sale.
STOCK SPLIT
On November 12, 1999, the Company announced it would convene a special
shareholders meeting to authorize a 2 for 1 stock split.
ACQUISITION OF FUISZ TECHNOLOGIES LTD.
On November 12, 1999, the Company completed its acquisition of Fuisz
in a two-stage cash and stock transaction. The Company purchased 6,585,225
shares of Fuisz for total consideration of $75.6 million in cash. Based on an
exchange ratio determined in accordance with the merger agreement, each share of
Fuisz outstanding on November 12, 1999 (other than shares owned by the Company
and its affiliates) converted into the right to receive .1197 of one common
share of the Company. Accordingly, the Company anticipates issuing approximately
1,500,000 common shares in exchange for Fuisz shares. In accordance with the
terms of the indenture governing the 7% convertible subordinated debenture of
Fuisz, on November 16, 1999 the Company and Fuisz commenced an offer to
repurchase the $75 million of outstanding convertible debentures. The offer is
scheduled to expire on December 16, 1999.
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Fuisz (now renamed Biovail Technologies Ltd.) is an international company
that is engaged in the development, manufacture and commercialization of a wide
range of drug delivery, nutraceutical and food ingredient products utilizing its
proprietary CEFORM(TM), Shearform(TM) and other drug delivery technologies.
Fuisz has research and manufacturing facilities in Virginia, as well as in
Dublin and Clonmel, Ireland.
The Company believes that the acquisition of Fuisz strengthens and broadens
its position as a drug delivery company and provides several strategic benefits,
including the following:
Attractive portfolio of proprietary technologies. The acquisition of Fuisz
significantly enhances the Company's ability to apply a variety of advanced drug
delivery technologies and delivery forms to a substantially broader range of
drugs. The Company believes these technologies are simpler and significantly
more flexible than competing technologies in the marketplace. Fuisz utilizes
proprietary technologies to formulate and taste mask drugs in a wide variety of
delivery forms, including rapid dissolve, enhanced absorption and controlled
release. Access to this portfolio of proprietary drug delivery technologies,
including the patented CEFORM(TM) and Shearform(TM) technologies, will allow the
Company immediately to expand its delivery platforms.
Leveraging of scientific knowledge. The acquisition of Fuisz augments the
Company's own scientific knowledge and expertise, enhancing its technology and
product development capabilities. The Company believes that allowing its
scientists to work and share ideas with Fuisz's scientists will enable the
Company to increase and accelerate its technology and product development
efforts.
Access to critical pharmaceutical company relationships. The acquisition of
Fuisz significantly expands the Company's network of pharmaceutical company
relationships. The Company will retain many of these relationships and expand
their depth and breadth where significant benefits can be achieved.
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Advantageous operational locations. The acquisition of Fuisz provides the
Company with a base for increased U.S. expansion opportunities. In October, 1999
Fuisz sold certain of its continental European operations and the rights to a
particular product for gross consideration of U.S. $39.5 million in cash.
Fuisz's technology involves drug delivery platforms and the application of
such platforms to specific product development programs. Fuisz currently is
involved in 13 product development projects for a number of pharmaceutical
companies, which projects are at varying stages of development. Two of such
projects have been submitted for approval with the applicable regulatory
authorities, one of which was submitted to the Food and Drug Administration in
the United States in June 1998 and the other of which was submitted to the
Medical Control Agency in the United Kingdom in April 1998. Based on the
Company's preliminary review of the technology and after discussions with
management of Fuisz, the Company estimates that if the product development
projects for the remaining 11 projects proceed as currently scheduled, these
projects would be completed in accordance with Fuisz's contractual obligations
with the relevant customers during the next 12 months. Although the Company has
commenced a review of the technology and the contractual and scientific bases of
these projects, the Company has not yet completed its review and, accordingly,
schedules for the completion of any one or more projects are only estimates. The
Company has also retained a third-party to value the technology and projects
under accepted appraisal methodologies. Upon completion of its review and the
receipt of the appraisal, the Company intends to prioritize development efforts
following the completion of the acquisition.
Fuisz's technology has not been employed in any product that has received
regulatory approval to date. The completion of any of the current in-process
development projects involves significant risk and complex scientific issues.
The Company cannot be certain that the technology can be commercially applied in
any products or that, if successfully applied, the pharmaceutical companies on
whose behalf the Company is developing these projects will market the products
successfully. As is the case in most pharmaceutical development projects, it
will take a number of years to achieve viable commercial
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<PAGE> 24
levels of production of a product utilizing Fuisz's technology due to the
lengthy time associated with manufacturing approvals and strategic marketing
partnering. As the revenue stream from any such products will not be fully
realized until the products are approved and commercialized, this could take a
significant number of years. However, if successful, the application of Fuisz's
technology will provide the Company with a source of income from both royalties
and manufacturing activities. To date the Company has not yet determined the
potential costs associated with the successful commercialization of any of these
projects.
If successful, Fuisz's technology and products would be expected to have
extended life cycles. Because Fuisz technology is based on drug delivery
technology, the technology and its application can be applied to numerous
products. Although the risk of technological feasibility is always present, the
Company's strategy is to exploit the technology through numerous product
developments, which the Company believes should result in the life of the
technology being at least fifteen years.
Except as may be effected in connection with the integration of operations
referred to above, the Company does not have any present plans or proposals that
would result in any extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of
assets, involving Fuisz or any of its subsidiaries, or any material changes in
Fuisz's corporate structure or business or the composition of Fuisz's management
or personnel.
On a pro forma basis, in accordance with Canadian GAAP and after giving
retroactive effect to the acquisition of Fuisz and the issuance of 5,000,000
shares in the Company's recent public offering (at an assumed price), for the
twelve months ended December 31, 1998 the Company would have had revenues of
$154.0 million, net income of $10.2 million and earnings per share of $0.31, and
for the six months ended June 30, 1999 the Company would have had revenues of
$91.2 million, net income of $1.1 million and earnings per share of $0.04. The
complete unaudited pro forma combined financial information and the underlying
assumptions and events on which such information is predicated is set forth
under Unaudited Pro Forma Combined
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<PAGE> 25
Financial Information included in the Registration Statement of the Company on
Form F-10 filed with the Securities and Exchange Commission on October 15, 1999.
GENERIC VERSION OF CARDIZEM CD
The Company received technical approval from the FDA in October 1999 for
its generic versions of Cardizem CD. The Company's generic version of Cardizem
CD was not the subject of patent infringement litigation and, therefore, the
Company is free to begin marketing this product upon the expiration of 180 days
of marketing exclusivity available to the "first to file" applicant pursuant to
the provisions of the Waxman-Hatch legislation. The Company expects to begin
marketing its generic Cardizem CD through its marketing partner, Teva
Pharmaceuticals USA Inc., in December 1999.
ADALAT CC
The Company received tentative approval from the FDA in June 1999 for its
30 mg. and 60 mg. generic versions of Adalat CC. Tentative approval means that
the scientific aspects of the product have been approved by the FDA. The Company
was the first company to file an Abbreviated New Drug Application ("ANDA") for
the 60 mg. strength of Adalat CC and will therefore be entitled to 180 days of
marketing exclusivity. Elan Corporaton plc was the first to file an ANDA for the
30 mg. strength. The Company has entered into an agreement with Elan giving the
Company exclusive marketing rights for the United States for Elan's generic
versions of Adalat CC in return for certain up front payments and future
royalties. The Company will thus be able to launch a 30 mg. Adalat CC product,
which the Company intends to do through Teva Pharmaceuticals, six months earlier
than previously scheduled.
VERELAN/MYLAN AGREEMENT
In March 1999, the Company entered into agreements with Mylan for the
marketing of all dosages of a generic version of Verelan using its ANDA first
filer status and Mylan's product approval, which was granted on April 22, 1999.
Mylan will manufacture all of the Company's requirements for Verelan until its
version of the product is approved. The Company markets
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<PAGE> 26
this product through its licensee, Teva, and Mylan independently markets and
prices the product on its own behalf.
CELEXA DEVELOPMENT AND MARKETING AGREEMENTS
In December 1998, the Company entered into a multi-faceted ten-year
agreement with Lundbeck for the development of a novel controlled-release
formulation of the anti-depressant citalopram, marketed under the trademark
Celexa in the United States. Under the agreement, the Company will develop,
manufacture and supply a controlled-release version of citalopram for commercial
sale by Lundbeck or its licensees worldwide. In exchange, Lundbeck will pay the
Company product development fees and an agreed upon supply price upon
commercialization of the controlled-release citalopram product.
In addition, Lundbeck has entered into an agreement with the Company by
which Crystaal will co-promote the immediate-release version of Celexa in
collaboration with Lundbeck Canada Inc. Crystaal will promote Celexa to primary
care physicians and will receive co-promotion fees for contributing to the
marketing of Celexa in Canada. On February 10, 1999, Lundbeck's
immediate-release version of Celexa was approved for marketing by Health
Canada's Therapeutic Products Program ("TPP") for the symptomatic relief of
depression.
Citalopram, an anti-depressant, belongs to a class of drugs known as SSRIs
(Selective Serotonin Reuptake Inhibitors). Citalopram is the best selling
anti-depressant in 13 countries, including eight in Europe, and has been
introduced in more than 60 countries worldwide under several trade names
including Celexa, Cipramil and Seropram. The worldwide market for such
anti-depressants is estimated to be in excess of $7 billion annually, growing at
a rate of 17% annually. Citalopram is a leading anti-depressant in Europe,
growing at a rate of 28% annually. Compared to many other SSRIs, citalopram has
an improved side effect profile and a lower incidence of drug interactions when
taken concurrently with other medications.
INTELLIPHARMACEUTICS INC. AGREEMENT
In March 1999, the Company entered into an agreement with
Intellipharmaceutics Inc., a company formed by its former
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<PAGE> 27
Vice President of Research. Under the agreement, Intellipharmaceutics utilizes
certain of its proprietary technology to help in formulating products.
Intellipharmaceutics will receive milestone payments and royalties with respect
to these products. While the Company believes most of Intellipharmaceutics'
resources will be spent in the formulation of its products in the near term, the
agreement permits Intellipharmaceutics to make its services and technology
available to others.
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<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Biovail Corporation International
November 30, 1999 By /s/John R. Miszuk
-----------------
John R. Miszuk
Vice President, Controller
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<PAGE> 1
EXHIBIT (a)
[BIOVAIL LOGO]
CONTACT:
Biovail: Eugene Melnyk
Chairman of the Board
Kenneth Howling
Chief Financial Officer
(416) 285-6000
Web Page: www.biovail.com
Investor Relations e-mail:
[email protected]
Fuisz: Dr. Richard C. Fuisz
Chairman
John Redd
Controller
(703) 995-2400
FOR IMMEDIATE RELEASE:
"BIOVAIL AND FUISZ ANNOUNCE RESULTS OF TENDER OFFER"
TORONTO, CANADA and CHANTILLY, VIRGINIA, September 3, 1999--Biovail
Corporation International (NYSE, TSE: BVF) and Fuisz Technologies Ltd. (NASDAQ:
FUSE) announced today that Biovail and ABCI Acquisition Sub. Corporation, its
wholly-owned merger subsidiary, have received the requisite regulatory approvals
and have instructed ChaseMellon Shareholder Services, L.L.C., the depositary
under ABCI Aquisition's tender offer for up to 6,585,225 outstanding shares of
Fuisz, to accept for payment the shares tendered pursuant to the tender offer.
Biovail and Fuisz were notified that the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, was terminated
as of Thursday, September 2, 1999. Biovail has also received clearance from the
Department of Enterprise, Trade and Employment in Ireland.
Pursuant to the terms of the offer, Biovail and its subsidiary have
accepted for payment 6,585,225 of the 13,101,667 shares of Fuisz common stock
which have been validly tendered pursuant to the tender offer.
- more -
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
As specified in the Offer to Purchase relating to the tender offer, because
more than the maximum number of shares to be purchased were tendered, tendered
shares will be purchased on a pro rata basis, with adjustments to avoid
purchases of fractional shares, based upon the number of shares validly tendered
prior to the expiration date and not withdrawn. The final proration factor is
approximately 50%. Tendered shares not accepted for payment due to proration
will be returned to the tendering shareholder.
Biovail has instructed the depositary, ChaseMellon Shareholder Services,
L.L.C., to commence payment as soon as possible. Biovail expects that
shareholders will begin receiving payments for shares purchased pursuant to the
tender offer on Friday, September 3, 1999.
The information agent for the offer is MacKenzie Partners, Inc. 156 Fifth
Avenue, New York, NY 10010, telephone (212) 929-5500 or (800) 322-2885. The
Dealer Manager for the offer is Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, NY 10172, telephone (877) 233-9567.
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
approvals, acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, new product development and launch, reliance
on key strategic alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and Exchange
Commission.
<PAGE> 1
EXHIBIT (b)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Ken Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
*BIOVAIL ANNOUNCES PUBLIC OFFERING*
- IN CANADA AND THE UNITED STATES -
TORONTO, Canada, September 21, 1999 - Biovail Corporation International
(NYSE,TSE:BVF) announced today that it has filed a preliminary short form
prospectus with the securities regulatory authorities in each of the provinces
of Canada and with the U.S. Securities and Exchange Commission with respect to
the issue to the public, on an underwritten basis, of 4,400,000 common shares.
The common shares are being qualified for distribution in all of the provinces
of Canada and are also being registered as being eligible for distribution in
the United States under the multijurisdictional disclosure system.
Based on the closing price of the common shares of Biovail on the New York
Stock Exchange on September 17, 1999, the Company estimates that the net
proceeds from the offering, after deducting underwriting fees and expenses, will
be approximately US$235.3 million. Certain shareholders of the Company have
granted the underwriters in the U.S. syndicate an option in respect of 660,000
common shares to cover over-allotments, if any. If the over-allotment option is
exercised, the Company will not receive any of the proceeds from the sale of
shares by the selling shareholders.
- more -
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
A registration statement relating to these securities has been filed with
the U.S. Securities and Exchange Commission but has not yet become effective.
These securities may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. This communication shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sales of these securities in any state in which such an offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
The managing underwriters for the common shares offered in the United
States are Donaldson, Lufkin & Jenrette, Merrill Lynch & Co., Morgan Stanley
Dean Witter, Banc of America Securities LLC, Punk, Ziegel & Company and DLJ
direct Inc. In Canada, the lead underwriters are Merrill Lynch Canada Inc. and
RBC Dominion Securities Inc. and the Canadian underwriting syndicate also
includes Yorkton Securities Inc., CIBC World Markets Inc., Dundee Securities
Corporation, HSBC Securities (Canada) Inc., National Bank Financial Corp.,
Scotia McLeod Inc. and TD Securities Inc.
A copy of the U.S. preliminary prospectus may be obtained from Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York,
10172, Attention: Prospectus Department and a copy of the Canadian preliminary
prospectus may be obtained from Merrill Lynch Canada Inc. at BCE Place, 181 Bay
Street, 4th Floor, Toronto, Ontario, Canada, M5J 2V8 or RBC Dominion Securities
Inc. at Royal Bank Plaza, 200 Bay Street, South Tower, 4th Floor, Toronto,
Ontario, Canada, M5J 2W7.
For additional information, please contact Kenneth G. Howling,
Vice-President and Chief Financial Officer, telephone (416) 285-6000.
Biovail Corporation International is listed on the Toronto Stock Exchange and
the New York Stock Exchange under the symbol "BVF" in each case.
- more -
<PAGE> 3
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT (c)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Robert Podruzny
President
(416) 285-6000
BIOVAIL AND ELAN SIGN GENERIC ADALAT (R) CC AGREEMENT
- BIOVAIL TO ACCELERATE LAUNCH OF ADALAT (R) CC'S 30MG DOSAGE -
TORONTO, Canada, October 14, 1999 - Biovail Corporation International
(NYSE,TSE:BVF) announced today the acquisition of exclusive marketing rights for
the U.S. to Elan Corporation plc's generic versions of Adalat(R) CC in return
for certain upfront payments and future royalties. Adalat(R) CC, a Nifedipine
product, is prescribed for the treatment of hypertension. Adalat(R) CC had brand
sales in excess of $350 million for the twelve months ended June 30, 1999.
As a result of this acquisition, Biovail, through its U.S. exclusive
marketing subdistributor, Teva Pharmaceuticals USA, will , by launching Elan's
30mg product, be able to market a generic version of Adalat(R) CC's 30 mg dosage
strength six months earlier than scheduled.
In addition, Biovail was the first to file, and has received tentative FDA
approval for, a generic version of Adalat(R) CC's 60 mg dosage strength. As a
result, Biovail will enjoy six months of marketing exclusivity after commercial
launch.
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 1
EXHIBIT (d)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Kenneth G. Howling
Chief Financial Officer
(416) 285-6000
BIOVAIL COMPLETES SHARE OFFERING
TORONTO, Canada, October 15, 1999 - Biovail Corporation International
(NYSE,TSE:BVF) announced today its offering of 5,000,000 shares of common stock
at US$51.00 per share for gross proceeds of US$255 million. In addition,
certain shareholders and the Company have granted the underwriters an option to
purchase an additional 750,000 shares solely to cover over-allotments, if any.
In the United States the managing underwriters for the offering are
Donaldson, Lufkin & Jenrette, Merrill Lynch & Co, Morgan Stanley Dean Witter,
Banc of America Securities LLC, Punk, Ziegel and Company and DLJ direct Inc. In
Canada, the managing underwriters are Merrill Lynch Canada Inc., RBC Dominion
Securities Inc., Yorkton Securities Inc., CIBC World Markets Inc., Dundee
Securities Corporation, HSBC Securities (Canada) Inc., National Bank Financial
Corp., ScotiaMcLeod Inc., and TD Securities.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This communication shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State/Province in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State/Province.
A prospectus relating to these securities may be obtained from Donaldson
Lufkin & Jenrette, 277 Park Avenue, New York, New York, 10172, 212 892-3000,
Merrill Lynch Canada Inc., BCE Place, 181 Bay Street, 4th Floor, Toronto,
Ontario, M5J 2V8, 416 586-6000, or RBC Dominion Securities Inc., 200 Bay Street,
Royal Bank Plaza, 4th Floor, South Tower, Toronto, Ontario M5J 2W7,
416 842-2000.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT (e)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Ken Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
BIOVAIL COMPLETES PUBLIC OFFERING
OF 5,000,000 SHARES
TORONTO, Canada, October 20, 1999 - Biovail Corporation International (NYSE,
TSE: BVF) announced today the completion of a public offering of 5,000,000
common shares at US$51 per share for gross proceeds of US$255 million. 4,545,000
of the shares were sold in the United States and outside of Canada and 455,000
of the shares were sold in Canada.
In the United States, the managing underwriters for the offering were Donaldson,
Lufkin & Jenrette, Merrill Lynch & Co., Morgan Stanley Dean Witter, Banc of
America Securities LLC, Punk, Ziegel & Company and DLJdirect Inc. In Canada, the
underwriters were Merrill Lynch Canada Inc., RBC Dominion Securities Inc.,
Yorkton Securities Inc., CIBC World Markets Inc., Dundee Securities Corporation,
HSBC Securities (Canada) Inc., National Bank Financial Corp., ScotiaMcLeod Inc.
and TD Securities Inc.
Biovail and certain shareholders of Biovail have granted to the U.S.
underwriters an option to acquire up to an aggregate of 750,000 additional
common shares at the offering price of US$51 per share to cover over-allotments,
if any. The over-allotment option is exercisable at any time up to 30 days from
the date hereof. The U.S. underwriters have provided notice to Biovail that they
are exercising the over-allotment option in full. Of the 750,000 additional
shares to be sold, 660,000 will be sold by certain shareholders of Biovail and
90,000 of the shares will be sold by Biovail. Biovail will receive additional
gross proceeds of US$4,590,000 upon the completion of the over-allotment option.
- more -
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT (f)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Bob Podruzny
President & Chief Operating Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
* BIOVAIL RECEIVES GENERIC CARDIZEM CD TENTATIVE APPROVAL *
Toronto, Canada, October 25, 1999 - Biovail Corporation International (NYSE,
TSE:BVF) today announced that it has received tentative approval in the U.S.
from the Food and Drug Administration for its generic versions of Cardizem CD.
Cardizem CD is indicated for the treatment of hypertension and angina. Branded
sales of Cardizem CD in the United States for the twelve months ended June 30th,
1999 exceeded $700 million.
Biovail's generic version of Cardizem CD was not the subject of patent
infringement litigation and, as such, Biovail is free to begin the marketing of
this product upon the expiry of 180 days of marketing exclusivity available to
the "first to file" applicant pursuant to the provisions of the Waxman-Hatch
legislation. Biovail expects to begin marketing its generic Cardizem CD through
its marketing partner, Teva Pharmaceuticals USA Inc., in December 1999.
Eugene Melnyk, Chairman of the Board, commented that "in the past five months,
Biovail has received FDA tentative approvals for Cardizem CD and Adalat CC and
approval for Cardizem SR. This level of achievement is indicative of the
scientific and developmental capability of the company. Biovail is also awaiting
FDA approval in due course for its generic versions of Procardia XL, Voltaren SR
and Dilacor XR."
- more -
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT (g)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Robert Podruzny
President, Chief Operating Officer
(416) 285-6000
SALE OF FUISZ EUROPEAN SUBSIDIARIES
GERMAN, FRENCH AND ITALIAN UNITS SOLD TO SHIRE
TORONTO, Canada and CHANTILLY, Virginia, October 25, 1999 - Biovail Corporation
International (NYSE, TSE: BVF) and Fuisz Technologies Ltd. (NASDAQ: FUSE)
announced today the sale of the German, French and Italian subsidiaries of Fuisz
to Shire Pharmaceuticals Group plc (NASDAQ: SHPGY; London: SHP.L) for a gross
consideration of U.S. $39.5 million in cash.
Eugene Melnyk, Chairman of the Board of Biovail commented, "We are very pleased
that these operations provide a good fit for Shire. The sale of these operations
for $39.5 million exceeds the original price paid and provides Biovail/Fuisz
with additional cash resources to take advantage of the many available
opportunities in furthering our product development and business strategies."
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 1
EXHIBIT (h)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Robert Podruzny
Chief Operating Officer
Kenneth Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
* BIOVAIL REPORTS RECORD 1999 THIRD QUARTER AND YEAR TO DATE
FINANCIAL RESULTS*
TORONTO, Canada, October 28, 1999 - Biovail Corporation International (NYSE,
TSE:BVF) today reported third quarter and nine month financial results for the
period ended September 30, 1999.
Revenue for the third quarter and first nine months of 1999 increased by 57% and
45% respectively to $45.6 million and $110.0 million, compared to third quarter
1998 revenue of $29.0 million and first nine months 1998 revenue of $76.1
million.
Operating income for the quarter was $21.3 million and for the first nine months
of 1999 was $48.4 million, representing increases of 53% and 49% respectively
over the comparable periods of 1998.
Net income for the quarter was $17.1 million or $0.70 per share, a 30% increase
over the net income of $13.2 million or $0.49 per share earned in 1998. For the
first nine months of 1999 net income was $37.5 million or $1.53 per share, a 23%
increase over $30.6 million or $1.14 per share in the comparable period of 1998.
- more -
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
Revenue and income improvements in both the third quarter and first nine months
of 1999 are attributable to increasing market penetration of Tiazac(R),
Biovail's prescription drug used in the treatment of angina and hypertension, in
the United States and Canada, as well as the launch of a generic version of the
angina/hypertension drug Verelan in the United States. In addition, increased
third party research and development revenue, and the Canadian launches of
Retavase, a fibrinolytic clot dissolving product, Brexidol, used for the relief
of pain and Celexa, an anti-depressant have all contributed to the company's
increasing revenue and income performance.
Eugene Melnyk, Chairman of the Board commented, "We are pleased to report that
the revenue diversification strategies initiated historically are today
generating positive results. Biovail's short-term growth strategy is on track
with the launch of two generic products in the U.S., the launch of four new
products in the Canadian marketplace, the tentative approval of generic Adalat
CC and Cardizem CD and the FDA review of generic applications for Procardia XL,
Dilacor XR and Voltaren XR. The development of our branded product pipeline is
on track and is expected to contribute significantly in the future. The Fuisz
Technology Ltd. acquisition is scheduled to close in November giving Biovail
additional technological platforms allowing us to capitalize on many exciting
opportunities."
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
and TPP approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission.
<PAGE> 3
BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
(UNAUDITED) (Audited)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT
Cash and short-term deposits $ 22,938 $ 78,279
Accounts receivable 48,060 42,768
Inventories 14,053 10,542
Executive stock purchase plan loans 2,320 2,924
Deposits and prepaid expenses 3,425 3,357
---------- ----------
90,796 137,870
LONG-TERM INVESTMENTS 10,055 10,055
INVESTMENT IN FUISZ TECHNOLOGIES LTD. 77,118 -
CAPITAL ASSETS, net 26,930 23,677
OTHER ASSETS, net 28,574 28,317
---------- ----------
$ 233,473 $ 199,919
========== ==========
LIABILITIES
CURRENT
Accounts payable $ 17,013 $ 12,244
Accrued liabilities 8,163 4,129
Income taxes payable 2,007 1,004
Customer prepayments 17,443 4,516
Current portion of long-term debt 747 653
---------- ----------
45,373 22,546
LONG-TERM DEBT 125,478 126,182
---------- ----------
170,851 148,728
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 21,797 19,428
Warrants 8,244 8,244
Retained earnings 32,275 24,748
Cumulative translation adjustment 306 (1,229)
---------- ----------
62,622 51,191
---------- ----------
$ 233,473 $ 199,919
========== ==========
</TABLE>
<PAGE> 4
BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENTS OF INCOME
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE
EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------- -----------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE
Product sales $ 28,730 $ 16,540 $ 66,271 $ 45,303
Research and development 12,240 8,974 27,592 20,927
Royalty and licensing 4,637 3,476 16,139 9,905
-------------- ------------- -------------- --------------
45,607 28,990 110,002 76,135
-------------- ------------- -------------- --------------
EXPENSES
Cost of goods sold 8,946 6,946 21,833 18,956
Research and development 7,699 4,047 19,482 12,179
Selling, general and administrative 7,678 4,067 20,282 12,521
-------------- ------------- -------------- --------------
24,323 15,060 61,597 43,656
-------------- ------------- -------------- --------------
OPERATING INCOME
21,284 13,930 48,405 32,479
EQUITY IN LOSS OF
FUISZ TECHNOLOGIES LTD. (361) - (361) -
INTEREST EXPENSE, net (2,722) (97) (8,171) (254)
-------------- ------------- -------------- --------------
INCOME BEFORE INCOME TAXES 18,201 13,833 39,873 32,225
PROVISION FOR INCOME TAXES 1,062 629 2,370 1,629
-------------- ------------- -------------- --------------
NET INCOME $ 17,139 $ 13,204 $ 37,503 $ 30,596
============== ============= ============== ==============
EARNINGS PER SHARE $ 0.70 $ 0.49 $ 1.53 $ 1.14
============== ============= ============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 24,451,000 26,899,000 24,451,000 26,899,000
============== ============= ============== ==============
</TABLE>
<PAGE> 5
BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1999 1998
---- ----
<S> <C> <C>
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING ACTIVITIES
OPERATING
Net income for the period $ 37,503 $ 30,596
Depreciation and amortization 4,960 3,534
Equity in loss of Fuisz Technologies Ltd. 361 -
--------- ---------
42,824 34,130
Changes in non-cash operating items 14,278 (805)
--------- ---------
57,102 33,325
--------- ---------
INVESTING
Additions to capital assets, net (5,281) (2,505)
Executive stock purchase plan loans 719 66
Acquisition of product rights (2,203) -
Investment in Fuisz Technologies Ltd. (77,479) -
Acquisition of long-term investments - (10,000)
Acquisition of royalty interest - (15,000)
Increase in other assets - (4,165)
--------- ---------
(84,244) (31,604)
--------- ---------
FINANCING
Acquisition of share capital (30,593) (22,598)
Issuance of share capital 2,985 3,776
Reduction in other long-term debt (667) (8,455)
Increase in other long-term debt - 19,141
--------- ---------
(28,275) (8,136)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 76 (19)
--------- ---------
DECREASE IN CASH (55,341) (6,434)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 78,279 8,275
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 22,938 $ 1,841
========= =========
REPRESENTED BY:
Cash and short-term deposits $ 22,938 $ 11,892
Bank indebtedness - (10,051)
--------- ---------
$ 22,938 $ 1,841
========= =========
</TABLE>
<PAGE> 1
Exhibit (i)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Robert Podruzny
Chief Operating Officer
Kenneth Howling
Chief Financial Officer
(416) 285-6000
*BIOVAIL ANNOUNCES AVERAGE SHARE PRICE AND EXPECTED EXCHANGE RATIO
FOR FUISZ TECHNOLOGIES LTD. ACQUISITION*
TORONTO, CANADA, November 10, 1999 -- Biovail Corporation International
(NYSE, TSE: BVF) announced today that the average share price for Biovail shares
for the period from October 20, 1999 through November 9, 1999 is $58.4750.
Accordingly, if the proposed merger between Biovail's wholly owned subsidiary
and Fuisz Technologies Ltd. (Nasdaq: FUSE) closes as expected immediately
following a special meeting of Fuisz shareholders scheduled to be held on
Friday, November 12, 1999, the exchange ratio to be used in connection with the
merger will be .1197 of a Biovail share for each share of Fuse. Based on this
ratio, Biovail anticipates issuing approximately 1,409,000 Biovail shares.
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug
delivery technologies.
''Safe Harbor'' statement under the Private Securities Litigation Reform
Act of 1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
approvals, acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, new product development and launch, reliance
on key strategic alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and Exchange
Commission.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 1
EXHIBIT (j)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Kenneth Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
*BIOVAIL STOCK SPLIT APPROVED BY BOARD OF DIRECTORS*
- CONVENING A SPECIAL SHAREHOLDER MEETING TO APPROVE A 2-FOR-1 STOCK SPLIT -
TORONTO, CANADA, November 12, 1999--Biovail Corporation International
(NYSE, TSE: BVF) announced today that its Board of Directors has approved the
convening of a Special Shareholder Meeting to receive shareholder authorization
for a 2-for-1 stock split of its common stock. Following shareholder approval
and the filing of articles of amendment, shareholders will be given proper
notification and will be able to receive new stock certificates reflecting the
stock split. Biovail currently has approximately 29,545,000 common shares
outstanding. In addition, the Company will also seek shareholder approval to
change its name to Biovail Corporation. Final details of the stock split, along
with time and location of the Special Shareholder Meeting, will be disseminated
to shareholders shortly.
Eugene Melnyk, Chairman of the Board commented, "We are very pleased with
the Company's recent performance including the tentative approvals of generic
versions of Adalat CC and Cardizem CD. A stock split at this time will reward
our existing shareholders by increasing liquidity and provide an attractive
investment opportunity for potential new shareholders."
- more -
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 2
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
approvals, acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, new product development and launch, reliance
on key strategic alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and Exchange
Commission.
<PAGE> 1
EXHIBIT (k)
[BIOVAIL LOGO]
CONTACT: Eugene Melnyk
Chairman of the Board
Kenneth Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
* BIOVAIL / FUISZ MERGER APPROVED BY SHAREHOLDERS *
TORONTO, CANADA / CHANTILLY, VIRGINIA, November 12, 1999--Biovail
Corporation International (NYSE, TSE: BVF) and Fuisz Technologies, Ltd. (NASDAQ:
"FUSE") today announced that the stockholders of Fuisz today approved and
adopted the Agreement and Plan of Merger dated as of July 25, 1999 by and among
Fuisz, Biovail Corporation International, and ABCI Acquisition Sub. Corporation,
a wholly-owned subsidiary of Biovail. Under the terms of the Agreement and Plan
of Merger, each outstanding share of Fuisz common stock not already owned by
Biovail will be converted into the right to receive .1197 of a share of Biovail
common shares.
The merger is effective today and Fuisz common stock will cease to be
traded on the Nasdaq as of the close of business today. Fuisz shareholders will
be sent instructions regarding the exchange of their certificates for
certificates evidencing Biovail common shares. Stockholders of Fuisz common
stock should not surrender or mail their certificates for exchange until they
receive instructions.
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
approvals, acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, new product development and launch, reliance
on key strategic alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and Exchange
Commission.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 1
[BIOVAIL LOGO]
EXHIBIT (l)
CONTACT: Eugene Melnyk
Chairman of the Board
Robert Podruzny
President
Kenneth Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
*BIOVAIL INCLUDED IN TORONTO STOCK EXCHANGE (TSE) 100 INDEX*
- LISTING TO COMMENCE NOVEMBER 17, 1998 -
TORONTO, CANADA, November 16, 1999--Biovail Corporation International (NYSE,
TSE: BVF) announced today that it has received notification that the Company
will be added to the consumer sector of the TSE 100 Index, effective Wednesday,
November 17, 1999.
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
approvals, acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, new product development and launch, reliance
on key strategic alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and Exchange
Commission.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 1
[BIOVAIL LOGO]
EXHIBIT (m)
CONTACT: Eugene Melnyk
Chairman of the Board
Robert Podruzny
President
Kenneth Howling
Chief Financial Officer
(416) 285-6000
FOR IMMEDIATE RELEASE:
*BIOVAIL ANNOUNCES OFFER TO PURCHASE ALL OF THE OUSTANDING 7%
CONVERTIBLE SUBORDINATED DEBENTURES OF BIOVAIL TECHNOLOGIES
LTD. (FORMERLY FUISZ TECHNOLOGIES LTD.)*
TORONTO, CANADA, November 17, 1999--Biovail Corporation International
(NYSE, TSE: BVF) announced today that its wholly owned subsidiary Biovail
Technologies Ltd. (formerly Fuisz Technologies Ltd.) has commenced an offer to
purchase for cash all of its outstanding 7% Convertible Subordinated Debentures
due 2004 at 100% of the principal amount thereof, plus accrued and unpaid
interest up to but excluding the repurchase date. The offer is being made
pursuant to the terms of the indenture governing the debentures and is scheduled
to expire on December 16, 1999. The Bank of New York is acting as depository for
the offer.
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995.
To the extent any statements made in this release contain information that
is not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting FDA
approvals, acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, new product development and launch, reliance
on key strategic alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and Exchange
Commission.
[Recycle logo]
BIOVAIL CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416)285-6000 Fax (416)285-6499
<PAGE> 1
EXHIBIT (n)
BIOVAIL
CORPORATION INTERNATIONAL
[ LOGO ]
INTERIM REPORT 1999
THIRD QUARTER
<PAGE> 2
DEAR FELLOW SHAREHOLDERS
Once again I am pleased to report an excellent performance by Biovail
Corporation International in the third quarter of 1999. The Company achieved
record third quarter and nine month financial results. These results were
attributable to many factors, including continued growth in sales of Tiazac(R),
sales of a generic formulation of Verelan in the US, increased revenue from
third party research and development, and the expansion of Crystaal, our
Canadian sales and marketing division. The third quarter was also marked by
strategic expansion, as the Company acquired Fuisz Technologies Ltd., an
acquisition that will significantly expand Biovail's drug delivery technologies
and platforms. This acquisition, along with other events during the quarter,
will continue to fuel your Company's growth.
TIAZAC (R)
Tiazac(R), Biovail's once-daily diltiazem formulation for the treatment of
angina and hypertension, continues to report increasing market penetration, both
in the lucrative US diltiazem market, where Tiazac's(R) share now exceeds 16%,
and in Canada, where it is marketed directly by Crystaal. Further expansion
opportunities exist for Tiazac(R) in European and other world markets, where it
is sold through a number of licensing agreements with local pharmaceutical
companies.
GENERIC VERELAN
During the third quarter, sales activity was reported following the late second
quarter US launch of Biovail's generic version of the successful calcium channel
blocker, Verelan, used in the treatment of hypertension. This product is being
marketed by Teva Pharmaceuticals.
GENERIC ADALAT CC
Towards the end of the quarter, Biovail announced the acquisition of exclusive
US marketing rights to Elan Corporation's generic version of Adalat CC. This
will allow Biovail, through its marketing partner Teva Pharmaceuticals, to
launch Elan's 30mg dose of generic Adalat CC in the US six months earlier than
scheduled and with six months of market exclusivity.
In addition, earlier in the year, Biovail received tentative FDA approval for
its 30mg and 60mg dosage of a generic version of Adalat CC. On launch of the
60mg dose, Biovail will have six months of market exclusivity. Adalat CC, used
in the treatment of hypertension, has annual US sales of approximately $350
million.
<PAGE> 3
GENERIC CARDIZEM CD
Tentative FDA approval was received for Biovail's generic version of Cardizem
CD. Indicated for the treatment of angina and hypertension, Cardizem CD had 1998
US sales in excess of $700 million. Biovail is free to market its generic
version in December 1999 upon expiry of a competitor's 180 day "first to
file"statutory exclusivity period. Biovail's generic version of Cardizem CD will
also be marketed in the US by Teva Pharmaceuticals.
CRYSTAAL CORPORATION
Biovail's Canadian sales and marketing division, Crystaal, continued to gain
market share and revenue, driven by sales of Tiazac(R) and the recent launches
of Retavase, a clot dissolving medication;Brexidol, used for pain relief;the
anti-depressant Celexa; and Cardiac STATus(TM), a rapid point-of-care diagnostic
test for heart attacks. In addition Corlopam, an in-licensed product, has been
submitted for approval to the Canadian regulatory authorities.
PRODUCT PIPELINE
Progress continued in both the Company's ANDA and NDA pipelines during the
quarter. In the ANDA pipeline, Biovail currently has several additional products
awaiting FDA approval in the US. These include generic versions of: Dilacor XR,
Procardia XL and Voltaren XR. The Company's NDA pipeline also continued to move
forward with products being developed on behalf of Intelligent Polymers Ltd. and
a proprietary controlled-release version of Celexa, a leading anti-depressant.
FUISZ ACQUISITION
The most exciting news in the third quarter was Biovail's acquisition of Fuisz
Technologies Ltd. Fuisz is a company specializing in advanced drug delivery
technologies, including its patented CEFORM(TM) and Shearform(TM) technologies.
It has modern research and manufacturing facilities in Chantilly, Virginia.
The acquisition of Fuisz further strengthens Biovail's position as a leader in
drug delivery technology and offers numerous strategic benefits. These include
the ability to apply an expanded variety of advanced drug delivery technologies
and delivery formats to a broader range of drugs, and the synergies created by
the sharing of scientific knowledge, expertise and technologies between the two
companies. Biovail will also benefit from Fuisz's extensive
<PAGE> 4
network of positive working relationships within the pharmaceutical industry.
And finally, the acquisition has allowed Biovail to expand its US presence and
provides a base for additional US expansion opportunities.
PUBLIC OFFERING
Subsequent to the third quarter, Biovail completed a successful public offering
of 5,000,000 common shares. A total of 4,545,000 shares were sold in the US and
outside of Canada, and 455,000 shares were sold in Canada. Gross proceeds from
this offering were $255 million. These proceeds will allow Biovail to capitalize
on exciting opportunities that present themselves in the pharmaceutical
industry.
RECORD RESULTS
The Company reported record third quarter and year-to-date financial results for
the period ended September 30, 1999. Revenue for the third quarter and first
nine months increased by 57% and 44% respectively to $45.6 million and $110.0
million, compared to 1998 third quarter revenue of $29.0 million and first nine
months revenue of $76.1 million. Operating income for the third quarter 1999 was
$21.3 million and for the first nine months was $48.4 million, representing
increases of 53% and 49% respectively over the same periods of 1998. Net income
for the third quarter was $17.1 million, or $0.70 per share, a 30% increase over
net income of $13.2 million or $0.49 per share for third quarter 1998. For the
first nine months of 1999, net income was $37.5 million, or $1.53 per share, a
23% increase over net income of $30.6 million, or $1.14 per share, for the first
nine months of 1998.
I would like to take this opportunity to thank the employees who continue to
work hard on behalf of the Company and shareholders for their support.
(signed) Eugene Melnyk
EUGENE MELNYK
Chairman of the Board
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
(ALL dollar amounts are expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) (Audited)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash and short-term deposits $ 22,938 $ 78,279
Accounts receivable 48,060 42,768
Inventories 14,053 10,542
Executive stock purchase plan loans 2,320 2,924
Deposits and prepaid expenses 3,425 3,357
- ---------------------------------------------------------------------------------------
90,796 137,870
LONG-TERM INVESTMENTS 10,055 10,055
INVESTMENT IN FUISZ TECHNOLOGIES LTD. 77,118 -
CAPITAL ASSETS, net 26,930 23,677
OTHER ASSETS, net 28,574 28,317
- ---------------------------------------------------------------------------------------
$ 233,473 $ 199,919
- ---------------------------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable $ 17,013 $ 12,244
Accrued liabilities 8,163 4,129
Income taxes payable 2,007 1,004
Customer prepayments 17,443 4,516
Current portion of long-term debt 747 653
- ---------------------------------------------------------------------------------------
45,373 22,546
LONG-TERM DEBT 125,478 126,182
- ---------------------------------------------------------------------------------------
170,851 148,728
- ---------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 21,797 19,428
Warrants 8,244 8,244
Retained earnings 32,275 24,748
Cumulative translation adjustment 306 (1,229)
- ---------------------------------------------------------------------------------------
62,622 51,191
- ---------------------------------------------------------------------------------------
$ 233,473 $ 199,919
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
CONSOLIDATED STATEMENTS OF INCOME
(All dollar amounts except per share data are expressed in thousands of
U.S.dollars)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------------
(Unaudited) 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
REVENUE $ 45,607 $ 28,990
EXPENSES
Cost of goods sold 8,946 6,946
Research and development 7,699 4,047
Selling, general and administrative 7,678 4,067
- ---------------------------------------------------------------------------------------
24,323 15,060
- ---------------------------------------------------------------------------------------
OPERATING INCOME 21,284 13,930
EQUITY IN LOSS OF FUISZ TECHNOLOGIES LTD. (361) -
INTEREST EXPENSE, net (2,722) (97)
- ---------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 18,201 13,833
PROVISION FOR INCOME TAXES 1,062 629
- ---------------------------------------------------------------------------------------
NET INCOME $ 17,139 $ 13,204
- ---------------------------------------------------------------------------------------
EARNINGS PER SHARE $ 0.70 $ 0.49
- ---------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 24,451,000 26,899,000
- ---------------------------------------------------------------------------------------
SEGMENTED INFORMATION
REVENUE FROM EXTERNAL CUSTOMERS
Product sales $ 28,730 $ 16,540
Research and development 12,240 8,974
Royalty and licensing 4,637 3,476
- ---------------------------------------------------------------------------------------
$ 45,607 $ 28,990
- ---------------------------------------------------------------------------------------
SEGMENT OPERATING INCOME (LOSS)
Product sales $ 14,421 $ 6,960
Research and development 4,015 4,406
Royalty and licensing 4,651 3,417
Unallocated (1,803) (853)
- ---------------------------------------------------------------------------------------
$ 21,284 $ 13,930
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
CONSOLIDATED STATEMENTS OF INCOME
(All dollar amounts except per share data are expressed in thousands of
U.S. dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
(Unaudited) 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
REVENUE $ 110,002 $ 76,135
EXPENSES
Cost of goods sold 21,833 18,956
Research and development 19,482 12,179
Selling, general and administrative 20,282 12,521
- ---------------------------------------------------------------------------------------
61,597 43,656
- ---------------------------------------------------------------------------------------
OPERATING INCOME 48,405 32,479
EQUITY IN LOSS OF FUISZ TECHNOLOGIES LTD. (361) -
INTEREST EXPENSE, net (8,171) (254)
- ---------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 39,873 32,225
PROVISION FOR INCOME TAXES 2,370 1,629
- ---------------------------------------------------------------------------------------
NET INCOME $ 37,503 $ 30,596
- ---------------------------------------------------------------------------------------
EARNINGS PER SHARE $ 1.53 $ 1.14
- ---------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 24,451,000 26,899,000
- ---------------------------------------------------------------------------------------
SEGMENTED INFORMATION
REVENUE FROM EXTERNAL CUSTOMERS
Product sales $ 66,271 $ 45,303
Research and development 27,592 20,927
Royalty and licensing 16,139 9,905
- ---------------------------------------------------------------------------------------
$ 110,002 $ 76,135
- ---------------------------------------------------------------------------------------
SEGMENT OPERATING INCOME (LOSS)
Product sales $ 30,255 $ 17,797
Research and development 6,590 7,363
Royalty and licensing 15,928 9,711
Unallocated (4,368) (2,392)
- ---------------------------------------------------------------------------------------
$ 48,405 $ 32,479
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts are expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
(Unaudited) 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING ACTIVITIES
OPERATING
Net income for the period $ 37,503 $ 30,596
Depreciation and amortization 4,960 3,534
Equity in loss of Fuisz
Technologies Ltd. 361 -
- ---------------------------------------------------------------------------------------
42,824 34,130
Changes in non-cash operating items:
Increase in accounts receivable (5,174) (3,659)
Increase in inventories (3,432) (1,462)
Increase in deposits
and prepaid expenses (68) (521)
Increase in accounts payable
and accrued liabilities 8,999 1,033
Increase in income taxes payable 1,026 809
Increase in customer prepayments 12,927 2,995
- ---------------------------------------------------------------------------------------
14,278 (805)
- ---------------------------------------------------------------------------------------
57,102 33,325
INVESTING
Additions to capital assets,net (5,281) (2,505)
Executive stock purchase plan loans 719 66
Acquisition of product rights (2,203) -
Investment in Fuisz Technologies Ltd. (77,479) -
Acquisition of long-term investments - (10,000)
Acquisition of royalty interest - (15,000)
Increase in other assets - (4,165)
- ---------------------------------------------------------------------------------------
(84,244) (31,604)
- ---------------------------------------------------------------------------------------
FINANCING
Acquisition of share capital (30,593) (22,598)
Issuance of share capital 2,985 3,776
Reduction in other long-term debt (667) (8,455)
Increase in other long-term debt - 19,141
- ---------------------------------------------------------------------------------------
(28,275) (8,136)
- ---------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 76 (19)
- ---------------------------------------------------------------------------------------
DECREASE IN CASH AND
CASH EQUIVALENTS (55,341) (6,434)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 78,279 8,275
- ---------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 22,938 $ 1,841
- ---------------------------------------------------------------------------------------
REPRESENTED BY:
Cash and short-term deposits $ 22,938 $ 11,892
Bank indebtedness - (10,051)
- ---------------------------------------------------------------------------------------
$ 22,938 $ 1,841
</TABLE>
<PAGE> 9
SHAREHOLDER INFORMATION
Head office
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
Canada L5L 1J9
How to Reach Us for More Information
For additional copies of this report, the annual report on form 20-F as filed
with the United States Securities and Exchange Commission, for quarterly reports
or for further information, please contact Investor Relations or visit our web
site.
By mail:
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
Canada L5L 1J9
By phone:
(416) 285-6000
By fax:
(416) 285-6499
By
e-mail:
[email protected]
Web site:
www.biovail.com
CORPORATE INFORMATION
STOCKLISTING REGISTRARS AND TRANSFER AGENTS
New York Stock Exchange CIBC Mellon Trust Company
Toronto Stock Exchange Toronto, Ontario
Symbol: BVF
ChaseMellon
Shareholder Services
New York, USA
To the extent any statements made in this report contains information that is
not historical, these statements are essentially forward-looking. As such, they
are subject to risks and uncertainties, including the difficulty of predicting
FDA and TPP approvals, acceptance and demand for new pharmaceutical products,
the impact of competitive products and pricing, new product development and
launch, reliance on key strategic alliances, availability of raw materials, the
regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the Company's filings with the U.S. Securities and
Exchange Commission and Canadian securities authorities.
<PAGE> 10
BIOVAIL
CORPORATION INTERNATIONAL
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel 416-285-6000 Fax 416-285-6499
<PAGE> 1
Exhibit (o)
MATERIAL CHANGE REPORT
Form 27 - Securities Act (Ontario)
Form 27 - Securities Act (British Columbia)
1. Reporting Issuer
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
L5L 1J9
2. Date of Material Change
July 25, 1999
3. Press Release
The press release prescribed by section 75(1) of the Securities Act
(Ontario) was filed through SEDAR on July 26, 1999.
4. Summary of Material Change
Biovail Corporation International ("Biovail") announced that they
have entered into a definitive merger agreement (the "Merger
Agreement") dated as of July 25, 1999 among Biovail, ABCI
Acquisition Sub. Corporation (the "Purchaser") and Fuisz
Technologies Inc. ("Fuisz"). Pursuant to the terms of the Merger
Agreement, Biovail and Fuisz have agreed to enter into a two-stage
cash and stock transaction that values Fuisz's shares at
approximately US$154 million, based on the closing sale price of the
shares of Biovail on July 23, 1999.
Full Description of Material Change
On July 23, 1999, Biovail, Fuisz and ABCI Acquisition Sub.
Corporation (the "Purchaser"), a Delaware corporation and an
indirect wholly-owned subsidiary of Biovail, entered into a merger
agreement (the "Merger Agreement") pursuant to which Biovail agreed
to cause the Purchaser to promptly commence an offer (the "Offer")
to purchase up to 6,585,225 of the outstanding shares of common
stock of Fuisz at a purchase price of US$7.00 per share, net to the
seller in cash. According to information provided by Fuisz to the
Purchaser, there were 22,030,723 common shares of Fuisz outstanding
as of July 25, 1999. The Purchaser and its affiliates beneficially
own 4,209,829 of such shares. Accordingly, if the Purchaser
purchases 6,585,225 shares of Fuisz pursuant to the Offer, Biovail
and its affiliates will own, beneficially, approximately 49% of the
outstanding shares of Fuisz.
The Merger Agreement further provides, among other things, that,
after the purchase of the shares of Fuisz pursuant to the Offer and
subject to the satisfaction
<PAGE> 2
or waiver of certain conditions as set forth in the Merger
Agreement, the Purchaser will be merged with and into Fuisz (the
"Merger"), with Fuisz surviving the Merger as a wholly-owned
subsidiary of Biovail.
Pursuant to the terms of the Merger, each issued and outstanding
share of Fuisz immediately prior to the effective time of the Merger
(other than shares held by Biovail, the Purchaser or any direct or
indirect wholly-owned subsidiary of Biovail) will be converted into
the right to receive a fraction of a common share of Biovail based
on an exchange ratio determined as follows:
(i) if the Average Trading Price (as hereinafter defined) of a
common share of Biovail is less than $45, the exchange ratio
shall be 0.1556;
(ii) if the Average Trading Price of a share of Biovail is
greater than or equal to $45, but less than or equal to
$58,625, the exchange ratio shall equal a fraction (rounded to
the nearest ten thousandth) determined by dividing $7 by the
Average Trading Price of a share of Biovail;
(iii) if the Average Trading Price of a share of Biovail is
greater than $58.625 but less than or equal to $62.810, the
exchange ratio shall equal 0.1194; and
(iv) if the Average Trading Price is greater than $62.810, the
exchange ratio shall equal a fraction (rounded to the nearest
ten-thousandth) determined by dividing $7.50 by the Average
Trading Price of a share of Biovail.
For purposes of the Merger Agreement, Average Trading Price is
defined as a number equal to the average of the daily closing prices
per common share of Biovail on the New York Stock Exchange (the
"NYSE") Composite Transactions Reporting System, as reported in The
Wall Street Journal for the fifteen trading days ending on the date
immediately prior to the second fully NYSE trading day.
5. Reliance On Section 75(3) of the Act
Not applicable.
6. Omitted Information
Not applicable.
2
<PAGE> 3
7. Senior Officers
The senior officer of Biovail who is knowledgeable about this
material change is:
John Miszuk
Vice-President and Controller
(416) 285-6000
8. Statement of Senior Officer
The foregoing accurately discloses the material change referred
to herein.
Dated this 10th day of August, 1999.
"John Miszuk"
------------------------------------
John Miszuk
Vice-president and Controller
3
<PAGE> 1
Exhibit (p)
MATERIAL CHANGE REPORT
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
SECTION 118(2) OF THE SECURITIES ACT (ALBERTA)
SECTION 67 OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 73 OF THE SECURITIES ACT (QUEBEC)
SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND)
1. Reporting Issuer
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
L5L 1J9
2. Date of Material Change
September 21, 1999
3. Press Release
The press release prescribed by section 75(1) of the Securities Act
(Ontario) was filed through SEDAR on September 22, 1999.
4. Summary of Material Change
Biovail Corporation International ("Biovail") announced that they
filed a preliminary short form prospectus dated September 21, 1999
with the securities regulatory authorities in each of the provinces
of Canada and with the Securities and Exchange Commission in the
United States with respect to the qualification for distribution of
4,400,000 common shares of Biovail in Canada and the United States.
Full Description of Material Change
On September 21, 1999, Biovail filed a preliminary short form
prospectus dated September 21, 1999 with the securities regulatory
authorities in each of the Provinces of Canada and with the
Securities and Exchange Commission in the United States with respect
to the issue to the public, on an underwritten basis, of 4,4000,000
common shares. The common shares are being qualified for distribution
in all of the provinces of Canada and are also being registered as
being eligible for distribution in the United States under the
multijurisdictional disclosure system. Certain shareholders of
Biovail have granted to the underwriters in the U.S. syndicate an
over-allotment option in respect of 660,000 common shares to cover
over-allotments, if any. If the over-allotment option is exercised,
Biovail will not receive any of the proceeds from the sale of shares
by the selling shareholders.
<PAGE> 2
5. Reliance on Section 75(3) of the Act
Not applicable.
6. Omitted Information
Not applicable.
7. Senior Officers
The senior officer of Biovail who is knowledgeable about this
material change is:
John Miszuk
Vice-President and Controller
(416) 285-6000
8. Statement of Senior Officer
The foregoing accurately discloses the material change referred to
herein.
Dated this 28th day of September, 1999.
--------------------------------
John Miszuk
Vice-President and Controller
2
<PAGE> 1
Exhibit (q)
MATERIAL CHANGE REPORT
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
SECTION 118(2) OF THE SECURITIES ACT (ALBERTA)
SECTION 67 OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 73 OF THE SECURITIES ACT (QUEBEC)
SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND)
1. Reporting Issuer
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
L5L 1J9
2. Date of Material Change
October 20, 1999
3. Press Release
The press release prescribed by section 75(1) of the Securities Act
(Ontario) was filed through SEDAR on October 20, 1999.
4. Summary of Material Changes
Biovail Corporation International ("Biovail") announced that on
October 20, 1999, they completed a public offering of 5,000,000 common
shares in Canada and the United States for gross proceeds of US$255
million.
Full Description of Material Change
On October 20, 1999, Biovail completed a public offering of 5,000,000
common shares at a price of US$51 per share for gross proceeds of
US$255 million. 4,545,000 of the shares were sold in the United States
and outside of Canada and 455,000 of the shares were sold in Canada.
In United States, the managing underwriters were Donaldson, Lufkin &
Jenrette, Merrill Lynch & Co., Morgan Stanley Dean Witter, Banc of
America Securities LLC, Punk, Ziegel and Company and DLJdirect Inc. In
Canada, the underwriters were Merrill Lynch Canada Inc., RBC Dominion
Securities Inc., Yorkton Securities Inc., CIBC World Markets Inc.,
Dundee Securities Corporation, HSBC Securities (Canada) Inc., National
Bank Financial Corp., ScotiaMcLeod Inc. and TD Securities Inc.
Certain shareholders of Biovail (the "Selling Shareholders") and
Biovail granted to the U.S. Underwriters an over-allotment option,
exerciseable within 30 days from the date of closing, to purchase up
to an additional 750,000 shares. On October 22, 1999, the U.S.
Underwriters exercised the over-allotment option and
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purchased 750,000 additional shares of Biovail at US$51 per share,
90,000 of which were sold by Biovail and 660,000 of which were sold by
the Selling Shareholders. In connection with such sale of shares,
Biovail received additional gross proceeds of US$4,590,000.
5. Reliance on Section 75(3) of the Act
Not applicable.
6. Omitted Information
Not applicable.
7. Senior Officers
The senior officer of Biovail who is knowledgeable about this material
change is:
John Miszuk
Vice-President and Controller
(416) 285-6000
8. Statement of Senior Officer
The foregoing accurately discloses the material change referred to
herein.
Dated this 22nd day of October, 1999.
"John Miszuk"
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John Miszuk
Vice-President and Controller
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