Biovail Updates 2005 Guidance; Company Provides Amortization Guidance; Strategic Transaction With Kos Results in Increased EPS Guidance; Diluted EPS Guidance Range Now $1.70 - $1.75 vs. $1.50 - $1.60 Excluding Certain Charges.TORONTO -- Biovail Corporation (NYSE NYSESee: New York Stock Exchange :BVF BVF Biovail Corporation (stock symbol) BVF Berufsverband der Frauenärzte eV (Muenchen, Germany) BVF Bearing Versus Frequency )(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :BVF) today announced updated financial guidance for 2005 that reflects the impact of the implementation of the first phase of the Company's new Strategic Plan. Earlier this week, Biovail announced the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of the Company's commercial operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ; changing the manner in which it commercializes products in the primary-care market of the U.S. and establishing the immediate profitability of that business. As part of that strategic initiative, Biovail will focus its direct selling Direct selling is the marketing of products or services to consumers through sales tactics including presentations, demonstrations, and phone calls. It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or brokers. efforts on specialist physicians, while leveraging established partners in primary-care markets. This strategic realignment carries more modest infrastructure requirements, while providing operational flexibility with regard to expanding into new specialist markets. As a result of the sale of the Teveten(R) products and the supply agreement for Cardizem(R) LA with Kos Pharmaceuticals, Inc., Biovail is updating overall revenue guidance for 2005 to a range of $860 million to $930 million, down from previous guidance of $925 million to $1 billion. Biovail's significant ongoing interest in Cardizem(R) LA, in conjunction with cost savings associated with the reduction in the Company's U.S. field sales force and operations personnel, results in an updated fully-diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. guidance range of $1.70 - $1.75 (exclusive of certain charges). At the mid-point, the partial year impact of this transaction represents an 11% increase relative to the mid-point of prior guidance, and a 28% increase relative to 2004 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (exclusive of certain charges). As before, Biovail's 2005 guidance does not include the impact of any potential new-product launches, supply-and-distribution agreements or acquisitions; restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). or other specific charges (see below for information on anticipated charges in the second quarter of 2005); nor does it include expenses related to stock-based compensation. Biovail's revenue guidance is based on a number of variables, including current prescription and business trends, and the success of our strategic marketing and distribution partners. Wellbutrin XL(R), Biovail's once-daily bupropion bupropion /bu·pro·pi·on/ (bu-pro´pe-on) a monocyclic compound structurally similar to amphetamine, used as the hydrochloride salt as an antidepressant and as an aid in smoking cessation. formulation which is manufactured and supplied to GlaxoSmithKline (GSK GSK GlaxoSmithKline plc (pharmaceutical company) GSK Glycogen Synthase Kinase GSK Gruppentraining Sozialer Kompetenzen (Germany) GSK Greenland Shark (FAO fish species code) ) for the U.S. market, continues to be a key contributor to Biovail's earnings in 2005. The table below summarizes Biovail's updated revenue guidance for 2005: ---------------------------------------------------------------------- ($ millions) Q2/2005 Q3/2005 Q4/2005 2005 ---------------------------------------------------------------------- Updated Guidance: Wellbutrin XL(R) 50 - 60 100 - 110 120 - 130 320 - 340 Total Revenues 170 - 210 227 - 267 247 - 287 860 - 930 Previous Guidance: Wellbutrin XL(R) 50 - 60 110 - 120 120 - 130 320 - 340 Total Revenues 200 - 240 250 - 295 260 - 305 925 - 1,000 ---------------------------------------------------------------------- Revenue guidance for Wellbutrin XL(R) remains unchanged at $320 million to $340 million in 2005, with the majority occurring in the second-half of the year. This reflects the timing of shipments and the dynamics of the tiered-pricing agreement with GSK. Biovail's updated 2005 guidance for gross margins on product sales is 77% to 78%, compared with prior guidance of 78% to 79%. The modest decrease reflects the new supply-and-distribution agreement for Cardizem(R) LA and the sale of the Teveten(R) products to Kos. Gross margins are expected to increase through the second half of 2005, primarily due to product mix driven by higher Wellbutrin XL(R) supply prices. As a result of the reduction in U.S. commercial operations personnel, and lower advertising and promotional spending (as Kos will now assume this responsibility for the Teveten(R) products and Cardizem(R) LA), Biovail's selling, general and administrative (SG&A) expenses will be positively impacted. These are now anticipated to be in the range of $190 million to $220 million in 2005, down from previous guidance of $300 million to $335 million. Amortization expense for 2005 is anticipated to be in the range of $60 million to $65 million, and is not included in the SG&A expense guidance figures above. Biovail will invest some of the cost savings associated with the realignment of the U.S. business to accelerate the Company's product-development pipeline. Accordingly, research-and-development expenses in 2005 are now expected to be in the range of $90 million to $115 million, compared with prior guidance of $80 million to $95 million. Biovail's updated diluted EPS guidance for 2005 is based on a number of variables and assumptions, including estimated revenues, expenses, gross margins, tax rate, number of shares outstanding and numerous other items as described in the Company's security filings. Updated diluted EPS for 2005 is expected to be in the range of $1.70 and $1.75. Quarterly EPS guidance for the remainder of 2005 is shown in the table below.
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Q2/2005 Q3/2005 Q4/2005 2005
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Updated
Guidance:
EPS(a) $0.22 - $0.26 $0.60 - $0.64 $0.74 - $0.78 $1.70 - $1.75
Previous
Guidance:
EPS(a) $0.20 - $0.25 $0.55 - $0.60 $0.65 - $0.72 $1.50 - $1.60
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(a) EPS guidance is exclusive of restructuring or other specific
charges, and does not include stock-based compensation expenses
As a result of the changes to the Company's U.S. commercial operations, Biovail will record a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of approximately $20 million to $25 million in the second quarter of 2005, primarily related to severance and other costs associated with a reduction in the number of employees in the U.S. commercial organization. Biovail is currently completing a third-party valuation of the Teveten(R) asset, and a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the write-down of this asset value, if any, will be recorded in the second quarter of 2005. The $104-million payment received from Kos, net of transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). , will be classified as deferred revenue and amortized into product revenues over the seven-year term of the Cardizem(R) LA supply agreement. The remaining net book value of the Teveten(R) asset will be reclassified as a deferred supply cost and will be amortized as an expense through cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold over the same period. About Biovail Corporation Biovail Corporation is a specialty pharmaceutical company, engaged in the formulation, clinical testing, registration, manufacture and commercialization of pharmaceutical products utilizing advanced drug-delivery technologies. For more information about Biovail, visit the company's Web site at www.biovail.com. For further information, please contact Ken Howling at 905-286-3000 or send inquiries to ir@biovail.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 To the extent any statements made in this release contain information that is not historical, these statements are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements include, but are not necessarily limited to, risks and uncertainties, including the difficulty of predicting U.S. Food and Drug Administration and Canadian Therapeutic Products Directorate Therapeutic Products Directorate (TPD) is a Canadian federal authority that regulates pharmaceutical drugs and medical devices for human use, a role performed by the Food and Drug Administration in the United States. 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 and finished products, the regulatory environment, tax rate assumptions, the outcome of legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission and the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. . Biovail undertakes no obligation to update or revise any forward-looking statement. |
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