<PAGE>
EXHIBIT 99.2
BIOVAIL CORPORATION
INTERIM REPORT 2000
SECOND QUARTER REPORT
Dear fellow shareholders
I am pleased to report that Biovail continued its impressive performance in
the second quarter of 2000 and can again report record results for the quarter
and the first half of the year. These results reflect continued growth in sales
as well as significant new milestones being attained.
CURRENT PRODUCTS
Tiazac-Registered Trademark-, Biovail's once-daily diltiazem formulation
continues its strong sales performance in the United States.
Tiazac-Registered Trademark- has achieved an approximate 20% share of the
diltiazem market, and sales appear unaffected by the entry of generic versions
of Cardizem CD and Dilacor. Further strategies are being developed by the
Company and its U.S. marketing partner, Forest Laboratories, to grow the
Tiazac-Registered Trademark- franchise. At this time, no generic versions of
Tiazac-Registered Trademark- have been approved and competition is not
anticipated until at least 2001.
Sales of the Company's generic versions of Cardizem CD, Trental and Verelan
are meeting or exceeding the expectations of Biovail and its U.S. marketing
partner Teva Pharmaceuticals. In addition, two new products launched earlier
this year in the United States -- the generic version of the non-steroidal
anti-inflammatory Voltaren XR and the generic version of the 30mg dosage
strength of the anti-hypertensive Adalat CC -- are performing well. The 60mg
strength of Biovail's generic Adalat CC has been approved and will be launched
later this year.
NEW PRODUCTS
Earlier this year, the Company reported the United Kingdom launch of Nurofen
Meltlets (ibuprofen) by Boots Healthcare International, the first commercial
launch of a product using Biovail's patented Flash Dose-Registered Trademark-
technology.
Late in the quarter, Biovail announced the successful completion of
development work on a novel controlled-release formulation of the leading SSRI
anti-depressant Celexa (citalopram). H. Lundbeck, Biovail's partner and the
developer of the original formulation of Celexa, has initiated Phase III
clinical trials of the new formulation in Canada. Celexa is currently the best
selling anti-depressant in eight countries.
Biovail's new controlled-release formulation has a unique pharmacokinetic
profile and is designed to improve patient tolerability and compliance.
The Company's generic once-daily controlled-release version of
Procardia XL, a nifedipine product used to treat angina and hypertension,
recently received tentative approval from the FDA. Current annual sales in the
United States of Procardia XL are approximately $522 million. Biovail plans to
launch its generic version through Teva Pharmaceuticals later this year.
CRYSTAAL
Crystaal, the Company's Canadian sales and marketing operation also
performed well during the quarter and the first half of this year. Sales of
Tiazac-Registered Trademark- and in-licensed anti-depressant Celexa have
exceeded expectations. Crystaal currently markets six products, including the
recently launched Monocor, a beta blocker for the treatment of hypertension
in-licensed from Wyeth-Ayerst. In addition, four other products are in various
stages of development and other in-licensing opportunities are presently under
investigation.
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PRODUCT PIPELINE
Numerous products are continuing to progress through Biovail's ANDA and NDA
drug development pipelines. A once-daily controlled-release formulation of
Buspirone is currently in Phase III clinical trials. Work is also progressing on
several other NDA products developed in cooperation with Intelligent Polymers.
In addition, the Company is furthering the development of six controlled-release
ANDA products, as well as eight NDA and ANDA products using Flash
Dose-Registered Trademark- technology.
COMPANY DEVELOPMENTS
There are two additional exciting developments to report in the second
quarter of 2000. The first is the addition of two new senior executives to our
management team. I am pleased to welcome Brian H. Crombie as Senior Vice
President and Chief Financial Officer of Biovail and Michel P. Chouinard as Vice
President and General Manager of Crystaal. Both these individuals bring
considerable expertise and experience to their respective positions and will be
instrumental in our continued progress.
Secondly, the Company announced the formation of a new internal division
called Biovail Ventures. The mandate of this new division is to investigate and
identify independent drug development opportunities for the Company and to make
investments (on a minority basis), in return for rights to complementary
technologies and products, as well as commercialization, manufacturing and
distribution rights. Several opportunities in this area are already being
investigated.
FINANCIAL RESULTS
As of January 1, 2000, Biovail began to report its financial results in
accordance with U.S. GAAP, and to report its earnings per share on a diluted
basis.
Biovail once again reported record financial results for the second quarter
and six months ended June 30, 2000. Revenue for the quarter and first half
increased by 71% and 70% respectively to $60.4 million and $107.3 million,
compared to 1999 second quarter revenue of $35.4 million and first half revenue
of $63.0 million. Operating income for the second quarter was $21.4 million, a
50% increase over the second quarter 1999, and operating income for the first
half was $35.6 million, a 42% increase over the same period in 1999. Net income
for the second quarter 2000 was $22.3 million, or $0.31 a share on a diluted
basis, a 106% increase over net income of $109.9 million, or $0.21 a share on
diluted basis, for the second quarter of 1999. Income before extraordinary item
for the first half of 2000 was $35.5 million, or $0.50 a share on a diluted
basis. This represents a 94% increase over 1999 first half income before
extraordinary item of $18.3 million, or $0.35 a share on a diluted basis.
On behalf of the Board, I would like to thank the Company's employees for
their contribution, and our shareholders for their ongoing support of our
efforts.
(Signed) EUGENE MELNYK
Chairman of the Board
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BIOVAIL CORPORATION
CONSOLIDATED BALANCE SHEETS
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents................................. $447,453 $ 178,086
Short-term investments.................................... 61,675 65,893
Accounts receivable....................................... 81,986 60,571
Inventories............................................... 23,891 12,701
Assets held for disposal.................................. -- 20,000
Deposits and prepaid expenses............................. 3,075 3,172
-------- ---------
618,080 340,423
LONG-TERM INVESTMENTS....................................... 1,654 12
PROPERTY, PLANT AND EQUIPMENT, net.......................... 46,407 45,300
OTHER ASSETS, net........................................... 87,543 86,478
-------- ---------
$753,684 $ 472,213
======== =========
LIABILITIES
CURRENT
Accounts payable.......................................... $ 22,813 $ 22,685
Accrued liabilities....................................... 24,543 31,107
Income taxes payable...................................... 4,945 3,585
Customer prepayments...................................... 9,922 4,962
Deferred tax liability.................................... 336 336
Current portion of long-term debt......................... 1,298 12,016
-------- ---------
63,857 74,691
DEFERRED TAX LIABILITY...................................... 4,531 4,698
CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES.... 300,000 --
LONG-TERM DEBT.............................................. -- 125,488
-------- ---------
368,388 204,877
-------- ---------
SHAREHOLDERS' EQUITY
Common shares, no par value, unlimited shares authorized,
64,797,000 and 62,196,000 issued and outstanding at
June 30, 2000 and December 31, 1999, respectively....... 476,363 373,962
Warrants.................................................. 8,244 8,244
Warrant subscription receivable........................... -- (2,287)
Deficit................................................... (98,399) (113,843)
Accumulated other comprehensive income (loss)............. (912) 1,260
-------- ---------
385,296 267,336
-------- ---------
$753,684 $ 472,213
======== =========
</TABLE>
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BIOVAIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED IN THOUSANDS OF U.S.
DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
2000 1999
---------- ----------
(Unaudited)
<S> <C> <C>
REVENUE
Product sales............................................. $ 42,362 $ 24,979
Research and development.................................. 15,495 7,878
Royalty and licensing..................................... 2,585 2,550
---------- ----------
60,442 35,407
---------- ----------
EXPENSES
Cost of goods sold........................................ 13,538 7,848
Research and development.................................. 13,942 6,459
Selling, general and administrative....................... 11,559 6,798
---------- ----------
39,039 21,105
---------- ----------
OPERATING INCOME............................................ 21,403 14,302
INTEREST INCOME (EXPENSES), net............................. 2,383 (2,657)
---------- ----------
INCOME BEFORE INCOME TAXES.................................. 23,786 11,645
PROVISION FOR INCOME TAXES.................................. 1,444 775
---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM............................ 22,342 10,870
EXTRAORDINARY ITEM -- Premium paid on early extinguishment
of U.S. Dollar Senior Notes............................... -- --
---------- ----------
NET INCOME.................................................. $ 22,342 $ 10,870
========== ==========
BASIC EARNINGS (LOSS) PER SHARE
Income before extraordinary item.......................... $ 0.34 $ 0.22
Extraordinary item........................................ -- --
---------- ----------
Net income................................................ $ 0.34 $ 0.22
========== ==========
DILUTED EARNINGS (LOSS) PER SHARE
Income before extraordinary item.......................... $ 0.31 $ 0.21
Extraordinary item........................................ -- --
---------- ----------
Net income................................................ $ 0.31 $ 0.21
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic..................................................... 64,765,000 49,068,000
========== ==========
Diluted................................................... 71,559,000 52,680,000
========== ==========
</TABLE>
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BIOVAIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED IN THOUSANDS OF U.S.
DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
2000 1999
---------- ----------
(Unaudited)
<S> <C> <C>
REVENUE
Product sales............................................. $ 75,993 $ 37,541
Research and development.................................. 25,996 13,955
Royalty and licensing..................................... 5,313 11,502
---------- ----------
107,302 62,998
---------- ----------
EXPENSES
Cost of goods sold........................................ 24,573 12,887
Research and development.................................. 25,708 11,783
Selling, general and administrative....................... 21,398 13,266
---------- ----------
71,679 37,936
---------- ----------
OPERATING INCOME............................................ 35,623 25,062
INTEREST INCOME (EXPENSES), net............................. 2,117 (5,449)
---------- ----------
INCOME BEFORE INCOME TAXES.................................. 37,740 19,613
PROVISION FOR INCOME TAXES.................................. 2,257 1,308
---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM............................ 35,483 18,305
EXTRAORDINARY ITEM -- Premium paid on early extinguishment
of U.S. Dollar Senior Notes............................... (20,039) --
---------- ----------
NET INCOME.................................................. $ 15,444 $ 18,305
========== ==========
BASIC EARNINGS (LOSS) PER SHARE
Income before extraordinary item.......................... $ 0.56 $ 0.37
Extraordinary item........................................ (0.31) --
---------- ----------
Net income................................................ $ 0.24 $ 0.37
========== ==========
DILUTED EARNINGS (LOSS) PER SHARE
Income before extraordinary item.......................... $ 0.50 $ 0.35
Extraordinary item........................................ (0.28) --
---------- ----------
Net income................................................ $ 0.22 $ 0.35
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic..................................................... 63,775,000 49,068,000
========== ==========
Diluted................................................... 70,925,000 52,680,000
========== ==========
</TABLE>
27
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BIOVAIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN ACCORDANCE WITH U.S. GAAP
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
2000 1999
--------- --------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 15,444 $ 18,305
Depreciation and amortization............................. 10,018 3,154
Deferred income tax recovery.............................. (167) --
Extraordinary item -- Premium paid on early extinguishment
of U.S. Dollar
Senior Notes............................................ 20,039 --
Compensation cost for employee stock options.............. -- 900
--------- --------
45,334 22,359
CHANGE IN NON-CASH OPERATING ITEMS:
Decrease (increase) in accounts receivable................ (22,041) 6,497
Increase in inventories................................... (11,517) (4,471)
Decrease (increase) in deposits and prepaid expenses...... 97 (145)
Decrease in accounts payable and accrued liabilities...... (7,961) (3,259)
Increase in income taxes payable.......................... 1,320 301
Increase in customer prepayments.......................... 4,960 11,610
--------- --------
(35,142) 10,533
--------- --------
10,192 32,892
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment, net........... (5,791) (2,785)
Maturity of short-term investments, net................... 4,218 --
Acquisition of long-term investments...................... (2,285) --
Proceeds from assets held for disposal.................... 20,000 --
Decrease in other assets.................................. 261 --
Acquisition of product rights............................. -- (1,811)
Repayment of executive stock purchase plan loans.......... -- 31
--------- --------
16,403 (4,565)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares................................. 102,822 2,088
Repurchase of common shares............................... -- (23,550)
Issuance of Convertible Subordinated Preferred Equivalent
Debentures, net of financing costs...................... 289,410 --
Repurchase of U.S. Dollar Senior Notes.................... (141,017) --
Reduction in other long-term debt......................... (10,657) (300)
Collection of warrant subscription receivable............. 2,287 1,397
--------- --------
242,845 (20,365)
--------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS............................................... (73) 117
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS....................... 269,367 8,079
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 178,086 78,279
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 447,453 $ 86,358
========= ========
</TABLE>
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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
<TABLE>
<CAPTION>
<S> <C>
BY PHONE: BY FAX:
(416) 285-6000 (416) 285-6499
BY E-MAIL: BY WEB:
[email protected] www.biovail.com
</TABLE>
CORPORATE INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
TRADING SYMBOLS REGISTRARS AND
Common Shares: BVF TRANSFER AGENTS
Common Share Warrants: BVFw CIBC Mellon Trust Company
Toronto, Canada
Convertible Subordinated Preferred BVFp ChaseMellon Shareholder Services
Equivalent Debentures: New York, New York
</TABLE>
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 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.
29
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2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
Tel (416) 285-6000 Fax (416) 285-6499
