Specialty pharmaceutical company Biovail Corp. (BVF,BVF.TO) Thursday reported a sharp decline in profit for the fourth quarter, despite a 33% growth in revenues, impacted by lower income tax benefit as compared to the year ago quarter, and higher expenses. Looking ahead to fiscal year 2010, the company sees reported and cash earnings to be below 2009 levels, primarily due to the significant investments being made in support of its future growth.
Biovail's net income for the quarter plunged to US$73.0 million or US$0.46 per share from US$120.4 million or US$0.76 per share in the same period a year ago.
Net income for the quarter includes charges of US$20.8 million for acquired in-process research and development related to the transactions with Santhera Pharmaceuticals (Switzerland) Ltd., MedGenesis Therapeutix Inc. and Amgen Inc., and an US$8.0 million impairment charge related to RUS-350; an US$11.0 million loss on the sale-and-leaseback of the company's corporate headquarters in Mississauga, Ontario. These charges were partially offset by a US$26.0 million deferred income tax benefit as the result of an adjustment to the valuation allowance recorded against the company's loss carry-forwards in the U.S, as compared to similar benefit of US$88.60 million recorded last year.
In aggregate, the one-time charges reduced net income by US$16.3 million or US$0.10 per share, compared with a positive impact of US$66.2 million or US$0.42 per share in the previous year.
Excluding items, quarterly earnings were US$0.56 per share.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of US$0.37 per share for the quarter. Analysts estimates typically exclude special items.
In the preceding third quarter, the company reported net income of US$40.36 million or US$0.25 per share, down from US$48.44 million or US$0.31 per share in the previous year.
Total revenues grew 33% to US$241.1 million from US$181.5 million generated last year. Analysts estimated revenues of US$223.63 million for the quarter.
Product sales increased 35% year-over-year to US$231.63 million that primarily reflected higher revenues from Wellbutrin XL and the inclusion of revenues from tetrabenazine products and Aplenzin. Product revenues for Wellbutrin XL increased to US$57.4 million from US$14.9 million, helped by the acquisition of the full U.S. commercialization rights to the product in May 2009. Biovail's global tetrabenazine franchise generated revenues of US$18.5 million. Aplenzin which was launched in April 2009, generated fourth-quarter revenues of US$3.0 million.
Revenues from research and development declined to US$3.79 million from US$5.83 million recorded last year. Revenues from royalty and other rose to US$5.64 million from US$4.22 million last year.
In the previous third quarter, revenues increased to US$212.52 million from US$181.09 million reported in the same quarter of 2008.
Research and development expenses for the fourth quarter increased sharply to US$38.36 million from US$16.09 million in the previous year. Amortization of intangible assets were US$34.33 million, higher than US$15.64 million recorded last year.
At the end of 2009, Biovail had cash balances of US$114.5 million. Net capital expenditures for the quarter increased to US$4.7 million from US$0.7 million in the prior-year quarter.
Net income for the fiscal year 2009 ended December 31 was US$176.5 million or US$1.11 per share, down from with US$199.9 million or US$1.25 per share in the previous year. Total annual revenues rose 8% to US$820.4 million from US$757.2 million reported in the prior year. Analysts estimated earnings of US$1.28 per share on revenues of US$802.73 million for the year.
Looking ahead to fiscal year 2009, Biovail expects modest growth in revenues, due primarily to increased contributions from Wellbutrin XL, the company's tetrabenazine franchise, diltiazem products and Biovail Pharmaceuticals Canada.
The company also anticipates gross margins to be negatively impacted by the higher supply price for Zovirax, growing sales of Xenazine and increased volumes for Biovail's generic diltiazem products, partially offset by efficiency gains from the company's restructuring initiatives.
R&D expenses in 2010, excluding upfront payments and the costs of new business-development activities, are expected to be about US$130 million, including the expenses of Biovail's Contract Research Division.
In November 2009, Biovail completed the sale-and-leaseback of its corporate headquarters in Mississauga, Ontario, for net cash proceeds of US$17.8 million, recognizing a loss on disposal of US$11.0 million in the fourth quarter of 2009. Biovail said it would continue to occupy the facility under a 20-year operating lease at market rental rates. In January 2010, Biovail completed the sale of its Dorado, Puerto Rico manufacturing facility for net cash proceeds of US$8.5 million, but said it would continue to occupy the facility until March 31, 2010.
The company declared a quarterly cash dividend of US$0.09 per share payable on April 5, 2010 to shareholders of record at the close of business March 8, with an ex-dividend date of March 4.
BVF is currently trading at $14.21, down $0.30 or 2.07%, on the NYSE. In the past 52-week period, share had been trading in the range of $9.26 to $16.14, with a three-month average volume of 1.13 million shares.
BVF.TO is currently trading at C$15.13 per share, down C$0.16 or 1.05%, on the Toronto Stock Exchange.
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