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EXHIBIT T
INTERIM REPORT 2000
FIRST QUARTER REPORT
[BIOVAIL LOGO]
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DEAR FELLOW SHAREHOLDERS
The first quarter of 2000 has seen Biovail Corporation continue the
excellent performance achieved throughout 1999. The Company reported record
first quarter financial results, with total revenues 70% greater than the first
quarter 1999, driven by product sales 168% better than the first three months of
last year. In addition, I am pleased to report a number of significant
achievements in the first quarter, including new product launches, in-licensing
agreements and exciting progress in our product pipeline.
RECORD PRODUCT SALES
Biovail recorded $33.6 million from product sales in the first quarter of
2000, a substantial increase from the $12.6 million in sales recorded in the
same period of last year. The increase is due to continuing strong sales of
Tiazac-Registered Trademark- in the U.S., where it currently maintains a 17%
share of the diltiazem market; continued penetration of
Tiazac-Registered Trademark- and other in-licensed products marketed by the
Company's Crystaal division in Canada; and the recent U.S. launches of generic
versions of Adalat CC, Cardizem CD and Voltaren XR through our U.S. marketing
partner Teva Pharmaceuticals.
NEW PRODUCT LAUNCHES
In the first quarter, Biovail successfully launched two significant new
generic products. The Company's generic version of Voltaren XR, a treatment for
osteoarthritis and rheumatoid arthritis with annual U.S. branded sales of $98
million, received FDA approval in February, and was immediately launched in the
U.S. market by Teva Pharmaceuticals Industries Ltd. Teva also launched Biovail's
generic Adalat CC in a 30mg dosage strength. At present, the 30mg dosage
accounts for approximately 30% of total Adalat CC sales of $357 million. In
addition, the launch in the U.K. of Nurofen Meltlets, a new form of ibuprofen
developed using Biovail's patented Flash Dose-Registered Trademark- technology,
marked a significant milestone. Nurofen Meltlets are marketed in the U.K. by
Boots Healthcare. Boots' Nurofen is currently the U.K.'s best selling pain
relief medication.
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CRYSTAAL PORTFOLIO GROWTH
Crystaal, Biovail's successful Canadian sales and marketing operation,
significantly increased its portfolio in the first quarter with the in-licensing
of three new products. Ampligen, a medication used in the treatment of chronic
fatigue syndrome, was in-licensed from Hemispherx Biopharma Inc. and is
currently awaiting final marketing approval. Fibrostat, a treatment for scars
due to burns and surgery, was in-licensed from Procyon Biopharma. Fibrostat is
in late Phase II trials. Monocor, a beta-blocker indicated for mild to moderate
hypertension was in-licensed from Wyeth-Ayerst Laboratories and is expected to
be launched in the second quarter. These join the five products currently
marketed in Canada by Crystaal, including Tiazac-Registered Trademark- and four
selected in-licensed products.
MANUFACTURING EXPANSION
Biovail's existing manufacturing operations in Manitoba, Canada and Puerto
Rico are operating at peak efficiency to meet the demand for the Company's
products. To ensure that the Company will continue to meet its future
requirements, Biovail announced the acquisition of the Dorado, Puerto Rico
manufacturing facility from McNeil Pharmaceuticals Corp., a division of Johnson
& Johnson Inc., in the quarter. The Dorado plant is an FDA-approved cGMP
facility currently occupying 120,000 sq. ft. with room for expansion.
PIPELINE PROGRESS
Significant progress was made in Biovail's product pipeline in the first
quarter of 2000, highlighted by two exciting developments. In March, FDA
approval was received for Biovail's NDA for a novel once-daily
controlled-release formulation of Diltiazem Hcl. In January, the Company
initiated Phase III clinical trials of its novel once-daily controlled-release
formulation of Buspirone, a successful medication used to treat generalized
anxiety disorders. Buspirone is currently only available as a three-times-daily
immediate-release product. Also in Biovail's NDA pipeline, development of a
controlled-release formulation of the antidepressant Celexa is proceeding on
schedule and other products, at various stages of development, are progressing
favourably. The Company's controlled-release generic pipeline includes three
products awaiting final FDA approval and several others under development.
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OTHER DEVELOPMENTS
Additional developments during the first quarter of 2000 included the
successful completion of two financing programs that raised gross proceeds of
approximately $400 million. Approximately $100 million was raised from an equity
offering, and $300 million from the issuance of convertible preferred
debentures. Approximately $141 million of these proceeds were used to retire the
Company's 10 7/8% U.S. Dollar Senior Notes.
Finally, Biovail completed the sale of its Irish manufacturing operations,
acquired in the acquisition of Fuisz Technologies Ltd., to Stada Arzneimittel AG
for $20 million.
RECORD FINANCIAL RESULTS
Effective January 1, 2000, Biovail changed its accounting reporting
convention to U.S. GAAP from Canadian GAAP. In addition, the Company began
reporting its earnings per share on a diluted basis.
Biovail reported record financial results for the first quarter of 2000.
Revenue for the first quarter increased by 70% to $46.9 million, compared to
$27.6 million for the first quarter of last year. Operating income for the
quarter was $14.2 million, a 32% improvement over the $10.8 million reported in
first quarter 1999. Diluted earnings per share before extraordinary item
increased by 27% to $0.19 per share over first quarter 1999 diluted earnings per
share of $0.15.
This excellent start to the new year, both financially and in terms of
Company progress, clearly positions Biovail for an outstanding 2000.
On behalf of the Board, I offer my gratitude to the employees of Biovail for
all of their efforts and to you, our shareholders, for your continued support.
(signed) Eugene Melnyk
Eugene Melnyk
Chairman of the Board
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CONSOLIDATED BALANCE SHEETS
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
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MARCH 31, DECEMBER 31,
(UNAUDITED) 2000 1999
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ASSETS
CURRENT
Cash and cash equivalents $475,670 $178,086
Short-term investments 19,547 65,893
Accounts receivable 75,577 60,571
Inventories 18,130 12,701
Assets held for disposal -- 20,000
Deposits and prepaid expenses 1,984 3,172
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590,908 340,423
LONG-TERM INVESTMENTS 3,190 12
PROPERTY, PLANT AND EQUIPMENT, net 47,193 45,300
OTHER ASSETS, net 89,878 86,478
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$731,169 $472,213
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LIABILITIES
CURRENT
Accounts payable $ 26,521 $ 22,685
Accrued liabilities 26,813 31,107
Income taxes payable 3,412 3,585
Customer prepayments 4,473 4,962
Deferred tax liability 336 336
Current portion of long-term debt 1,318 12,016
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62,873 74,691
DEFERRED TAX LIABILITY 4,614 4,698
CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES 300,000 --
LONG-TERM DEBT -- 125,488
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367,487 204,877
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SHAREHOLDERS' EQUITY
Common shares, no par value, unlimited shares authorized,
64,731,000 and 62,196,000 issued and outstanding at
March 31, 2000 and December 31, 1999, respectively 475,470 373,962
Warrants 8,244 8,244
Warrant subscription receivable (1,005) (2,287)
Deficit (120,741) (113,843)
Accumulated other comprehensive income 1,714 1,260
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363,682 267,336
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$731,169 $472,213
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CONSOLIDATED STATEMENTS OF INCOME (LOSS)
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED IN THOUSANDS OF U.S.
DOLLARS)
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THREE MONTHS ENDED
MARCH 31,
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(UNNAUDITED) 2000 1999
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REVENUE
Product sales $ 33,631 $ 12,562
Research and development 10,501 6,077
Royalty and licensing 2,728 8,952
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46,860 27,591
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EXPENSES
Cost of goods sold 11,035 5,039
Research and development 11,766 5,324
Selling, general and administrative 9,839 6,468
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32,640 16,831
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OPERATING INCOME 14,220 10,760
INTEREST EXPENSE, net (266) (2,792)
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INCOME BEFORE INCOME TAXES 13,954 7,968
PROVISION FOR INCOME TAXES 813 533
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INCOME BEFORE EXTRAORDINARY ITEM 13,141 7,435
EXTRAORDINARY ITEM -- Premium paid on early extinguishment
of U.S. Dollar Senior Notes (20,039) --
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NET INCOME (LOSS) $ (6,898) $ 7,435
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BASIC EARNINGS (LOSS) PER SHARE
Income before extraordinary item $ 0.21 $ 0.15
Extraordinary item (0.32) --
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Net income (loss) $ (0.11) $ 0.15
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DILUTED EARNINGS (LOSS) PER SHARE
Income before extraordinary item $ 0.19 $ 0.15
Extraordinary item (0.29) --
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Net income (loss) $ (0.10) $ 0.15
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic 62,792,000 49,207,000
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Diluted 70,261,000 50,388,000
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CONSOLIDATED STATEMENTS OF CASH FLOWS
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLARS AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31,
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(UNAUDITED) 2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (6,898) $ 7,435
Depreciation and amortization 5,540 1,489
Deferred income tax provision (84) --
Extraordinary item -- Premium paid on early extinguishment
of U.S. Dollar Senior Notes 20,039 --
Compensation cost for employee stock options -- 281
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18,597 9,205
Change in non-cash operating items:
Decrease (increase) in accounts receivable (12,340) 1,466
Increase in inventories (5,550) (3,030)
Decrease in deposits and prepaid expenses 1,188 45
Decrease in accounts payable and accrued liabilities (3,241) (383)
Decrease in income taxes payable (177) (386)
Increase (decrease) in customer prepayments (489) 9,440
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(20,609) 7,152
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(2,012) 16,357
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment, net (3,929) (1,611)
Maturity of short-term investments, net 46,346 --
Acquisition of long-term investments (2,285) --
Proceeds from assets held for disposal 17,000 --
Decrease in other assets 261 --
Advance of executive stock purchase plan loans -- (52)
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57,393 (1,663)
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CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of share capital 102,298 1,424
Repurchase of share capital -- (14,933)
Issuance of convertible subordinated preferred equivalent
debentures, net of financing costs 290,312 --
Repurchase of U.S. Dollar Senior Notes (141,017) --
Reduction in other long-term debt (10,651) (300)
Collection of warrant subscription receivable 1,282 640
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242,224 (13,169)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (21) (548)
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INCREASE IN CASH AND CASH EQUIVALENTS 297,584 977
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 178,086 78,279
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 475,670 $ 79,256
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CORPORATE INFORMATION
BOARD OF DIRECTORS
EUGENE N. MELNYK
Chairman of the Board, Biovail Corporation
BRUCE D. BRYDON
Chief Executive Officer, Biovail Corporation
ROBERT A. PODRUZNY
President and Chief Operating Officer, Biovail Corporation
KENNETH C. CANCELLARA, Q.C.
Senior Vice President, General Counsel and Secretary, Biovail Corporation
ROLF K. REININGHAUS
Senior Vice President, Corporate and Strategic Development, Biovail Corporation
WILFRED BRISTOW
Vice President, Nesbitt Burns Inc.
ROGER ROWAN
President and Chief Operating Officer, Watt Carmichael Inc.
ROBERT VUJEA
President, R&D Chemical Corporation
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TRADING SYMBOLS REGISTRARS AND TRANSFER AGENTS
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Common Shares: BVF
Common Share CIBC Mellon Trust Company
Warrants: BVF_w Toronto, Canada
Convertible ChaseMellon Shareholder
Subordinated Services
Preferred New York, New York
Equivalent
Debentures: BVF_p
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THE ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders will be held at 10:00 a.m.
Monday, June 26, 2000 at the Royal York Hotel,
Territories Room, 100 Front Street, Toronto, Ontario.
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SHAREHOLDER INFORMATION
HEAD OFFICE
Biovail Corporation
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.
BY MAIL:
Biovail Corporation
2488 Dunwin Drive
Mississauga, Ontario
Canada L5L 1J9
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BY PHONE: BY FAX:
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(416) 285-6000 (416) 285-6499
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BY E-MAIL: BY WEB:
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[email protected] www.biovail.com
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THE FOLLOWING WORDS AND LOGOS ARE TRADEMARKS FOR THE COMPANY AND MAY BE
REGISTERED IN CANADA, THE UNITED STATES AND CERTAIN OTHER JURISDICTIONS:
BIOVAIL, TIAZAC-REGISTERED TRADEMARK-, VIAZEM, CEFORM-REGISTERED TRADEMARK-,
FLASH DOSE-REGISTERED TRADEMARK-, SHEARFORM-REGISTERED TRADEMARK- AND CRYSTAAL.
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 TTP 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 logo]
2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416) 285-6000 Fax (416) 285-6499
