Biovail Corp. (BVF, Financial) filed Quarterly Report for the period ended 2011-06-30.
Biovail Corp. has a market cap of $1.64 billion; its shares were traded at around $0 with a P/E ratio of 26.8. The dividend yield of Biovail Corp. stocks is 13.7%.
On February 22, 2011 and March 25, 2011, we acquired the U.S. and Canadian rights, respectively, to non-ophthalmic topical formulations of Zovirax® from GlaxoSmithKline ("GSK"). Pursuant to the terms of the asset purchase agreements, we paid GSK an aggregate amount of $300.0 million in cash for both the U.S. and Canadian rights. We had been marketing Zovirax® in the U.S. since January 1, 2002, under a 20-year exclusive distribution agreement with GSK, which distribution agreement terminated following the closing of the U.S. transaction. We have entered into new supply agreements and new trademark license agreements with GSK with respect to the U.S. and Canadian territories. On March 31, 2011, we out-licensed the product rights to Cloderm® Cream, 0.1%, in the U.S. to Promius Pharma LLC, an affiliate of Dr. Reddy's Laboratories, in exchange for a $36.0 million upfront payment, which was received in early April 2011, and future royalty payments. In connection with the sale of Cloderm®, we recognized the upfront payment as alliance revenue in the first quarter of 2011, and expensed the $30.7 million carrying amount of the Cloderm® intangible assets as cost of alliance revenue. We will recognize the future royalty payments as alliance revenue as they are earned. On June 29, 2011, we entered into a license agreement with Meda Pharma SARL ("Meda") to acquire the exclusive rights to commercialize both Elidel® Cream and Xerese Cream in the U.S., Canada and Mexico. In addition, we and Meda have the right to undertake development work in respect of Elidel® and Xerese products. We made an upfront payment to Meda of $76.0 million, and we will pay a series of potential milestones of up to $16.0 million and guaranteed royalties totaling $120.0 million in the aggregate through 2011 and 2012. Thereafter, we will pay a double-digit royalty to Meda on net sales of Elidel®, Xerese and Zovirax®, including additional minimum royalties of $120.0 million in the aggregate during 2013-2015. The fair value of the upfront and contingent consideration, inclusive of royalty payments, was determined to be $437.7 million as of the acquisition date, which has been provisionally assigned primarily to product brands intangible assets ($406.4 million) and acquired IPR&D assets ($33.5 million). The acquired IPR&D assets relate to the development of a Xerese life-cycle product. The projected cash flows from the acquired IPR&D assets were adjusted for the probability of successful development and commercialization of the product. A risk-adjusted discount rate of 13% was used to present value the projected cash flows. Material cash inflows are expected to commence in 2014. Solely for purposes of estimating the fair value of these assets, we have estimated that we will incur costs of approximately $14.0 million to complete the project. In addition, we have entered into the following business transactions, which are expected to be completed prior to year-end:
incremental revenues from Valeant products and services of $286.3 million and $567.6 million in the second quarter and first half of 2011, respectively; the inclusion of PharmaSwiss revenues from the acquisition date of $65.4 million and $81.6 million in the second quarter and first half of 2011, respectively; alliance revenue of $40.0 million recognized in the second quarter of 2011, related to the milestone payment from GSK in connection with the launch of Trobalt; and alliance revenue of $36.0 million recognized in the first quarter of 2011 on the out-license of the Cloderm® product rights in March 2011. Changes in Earnings
Net income increased $22.4 million, or 66%, to $56.4 million (diluted earnings per share of $0.17) in the second quarter of 2011, compared with $34.0 million (diluted earnings per share of $0.21) in the second quarter of 2010, and increased $32.0 million, or 104%, to $62.8 million (diluted earnings per share of $0.19) in the first
an increased contribution (product sales revenue less cost of goods sold, exclusive of amortization of intangible assets) from product sales of $192.7 million and $370.8 million in the second quarter and first half of 2011, respectively, mainly related to the addition of Valeant and PharmaSwiss product sales (net of incremental charges in those respective periods of $16.3 million and $46.2 million, in the aggregate, to cost of goods sold from the sale of acquired inventories that were written up to fair value), as well as higher volumes and pricing for Xenazine® products and a lower supply price for Zovirax® inventory purchased from GSK, as a result of the new supply agreement that became effective with the acquisition of the U.S. rights; a $21.3 million net realized gain on the disposal of our equity investment in Cephalon, Inc. ("Cephalon"), which was realized in the second quarter of 2011 (as described below under "Results of Operations Non-Operating Income (Expense) Gain (Loss) on Investments, Net); and decreases of $8.2 million and $57.2 million in acquired IPR&D expense in the second quarter and first half of 2011, respectively, as described below under "Results of Operations Operating Expenses Acquired IPR&D". Those factors were partially offset by:
the inclusion of Valeant operating costs in the second quarter and first half of 2011, net of realized synergies from the Merger; increases of $81.6 million and $160.4 million in amortization expense in the second quarter and first half of 2011, respectively, primarily related to the identifiable intangible assets of Valeant and PharmaSwiss; increases of $73.1 million and $132.0 million in interest expense in the second quarter and first half of 2011, respectively, reflecting legacy Valeant debt assumed as of the Merger Date, and the post-Merger issuances of senior notes in the fourth quarter of 2010 and first quarter of 2011 (as described below under "Financial Condition, Liquidity and Capital Resources Financial Assets (Liabilities)"); the inclusion of $27.6 million and $45.2 million of primarily Merger-related restructuring charges and other integration costs in the second quarter and first half of 2011, respectively; increases in non-restructuring-related share-based compensation of $23.7 million and $51.8 million in the second quarter and first half of 2011, respectively, including approximately $16.1 million and $30.2 million, in those respective periods, related to the amortization of the fair value increment on Valeant stock options and RSUs converted into Company awards as of the Merger Date, and $9.2 million related to an equitable adjustment to certain vested stock options awards outstanding as of March 9, 2011, in connection with the post-Merger special dividend of $1.00 per common share declared and paid in the fourth quarter of 2010; and charges of $14.7 million and $23.0 million on the extinguishment of debt in the second quarter and first half of 2011, respectively, mainly in connection with the repurchase of a portion of our 5.375% senior convertible notes due 2014 (the "5.375% Convertible Notes"), as described below under "Financial Condition, Liquidity and Capital Resources Securities Repurchase Program", and the share settlement of the 4.0% convertible subordinated notes due 2013 of Valeant (the "4.0% Convertible Notes"), as described below under "Financial Condition, Liquidity and Capital Resources Financial Assets (Liabilities)". Changes in Financial Condition
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Biovail Corp. has a market cap of $1.64 billion; its shares were traded at around $0 with a P/E ratio of 26.8. The dividend yield of Biovail Corp. stocks is 13.7%.
Highlight of Business Operations:
PharmaSwiss comprised cash paid of $491.2 million (€353.1 million) and the rights to contingent payments of up to $41.7 million (€30.0 million) if certain net sales milestones of PharmaSwiss are achieved for the 2011 calendar year. The fair value of the contingent payments was determined to be $27.5 million as of the acquisition date. The total fair value of consideration transferred of $518.7 million has been provisionally assigned primarily to inventories ($70.7 million), identifiable intangible assets ($209.2 million) and goodwill ($172.2 million). PharmaSwiss is an existing partner to several large pharmaceutical and biotech companies offering regional expertise in such functions as regulatory, compliance, sales, marketing and distribution, in addition to developing its own product portfolio. Through its business operations, PharmaSwiss offers a broad product portfolio in seven therapeutic areas and operations in 19 countries throughout Central and Eastern Europe, including Serbia, Hungary, the Czech Republic and Poland, as well as in Greece and Israel.On February 22, 2011 and March 25, 2011, we acquired the U.S. and Canadian rights, respectively, to non-ophthalmic topical formulations of Zovirax® from GlaxoSmithKline ("GSK"). Pursuant to the terms of the asset purchase agreements, we paid GSK an aggregate amount of $300.0 million in cash for both the U.S. and Canadian rights. We had been marketing Zovirax® in the U.S. since January 1, 2002, under a 20-year exclusive distribution agreement with GSK, which distribution agreement terminated following the closing of the U.S. transaction. We have entered into new supply agreements and new trademark license agreements with GSK with respect to the U.S. and Canadian territories. On March 31, 2011, we out-licensed the product rights to Cloderm® Cream, 0.1%, in the U.S. to Promius Pharma LLC, an affiliate of Dr. Reddy's Laboratories, in exchange for a $36.0 million upfront payment, which was received in early April 2011, and future royalty payments. In connection with the sale of Cloderm®, we recognized the upfront payment as alliance revenue in the first quarter of 2011, and expensed the $30.7 million carrying amount of the Cloderm® intangible assets as cost of alliance revenue. We will recognize the future royalty payments as alliance revenue as they are earned. On June 29, 2011, we entered into a license agreement with Meda Pharma SARL ("Meda") to acquire the exclusive rights to commercialize both Elidel® Cream and Xerese Cream in the U.S., Canada and Mexico. In addition, we and Meda have the right to undertake development work in respect of Elidel® and Xerese products. We made an upfront payment to Meda of $76.0 million, and we will pay a series of potential milestones of up to $16.0 million and guaranteed royalties totaling $120.0 million in the aggregate through 2011 and 2012. Thereafter, we will pay a double-digit royalty to Meda on net sales of Elidel®, Xerese and Zovirax®, including additional minimum royalties of $120.0 million in the aggregate during 2013-2015. The fair value of the upfront and contingent consideration, inclusive of royalty payments, was determined to be $437.7 million as of the acquisition date, which has been provisionally assigned primarily to product brands intangible assets ($406.4 million) and acquired IPR&D assets ($33.5 million). The acquired IPR&D assets relate to the development of a Xerese life-cycle product. The projected cash flows from the acquired IPR&D assets were adjusted for the probability of successful development and commercialization of the product. A risk-adjusted discount rate of 13% was used to present value the projected cash flows. Material cash inflows are expected to commence in 2014. Solely for purposes of estimating the fair value of these assets, we have estimated that we will incur costs of approximately $14.0 million to complete the project. In addition, we have entered into the following business transactions, which are expected to be completed prior to year-end:
incremental revenues from Valeant products and services of $286.3 million and $567.6 million in the second quarter and first half of 2011, respectively; the inclusion of PharmaSwiss revenues from the acquisition date of $65.4 million and $81.6 million in the second quarter and first half of 2011, respectively; alliance revenue of $40.0 million recognized in the second quarter of 2011, related to the milestone payment from GSK in connection with the launch of Trobalt; and alliance revenue of $36.0 million recognized in the first quarter of 2011 on the out-license of the Cloderm® product rights in March 2011. Changes in Earnings
Net income increased $22.4 million, or 66%, to $56.4 million (diluted earnings per share of $0.17) in the second quarter of 2011, compared with $34.0 million (diluted earnings per share of $0.21) in the second quarter of 2010, and increased $32.0 million, or 104%, to $62.8 million (diluted earnings per share of $0.19) in the first
an increased contribution (product sales revenue less cost of goods sold, exclusive of amortization of intangible assets) from product sales of $192.7 million and $370.8 million in the second quarter and first half of 2011, respectively, mainly related to the addition of Valeant and PharmaSwiss product sales (net of incremental charges in those respective periods of $16.3 million and $46.2 million, in the aggregate, to cost of goods sold from the sale of acquired inventories that were written up to fair value), as well as higher volumes and pricing for Xenazine® products and a lower supply price for Zovirax® inventory purchased from GSK, as a result of the new supply agreement that became effective with the acquisition of the U.S. rights; a $21.3 million net realized gain on the disposal of our equity investment in Cephalon, Inc. ("Cephalon"), which was realized in the second quarter of 2011 (as described below under "Results of Operations Non-Operating Income (Expense) Gain (Loss) on Investments, Net); and decreases of $8.2 million and $57.2 million in acquired IPR&D expense in the second quarter and first half of 2011, respectively, as described below under "Results of Operations Operating Expenses Acquired IPR&D". Those factors were partially offset by:
the inclusion of Valeant operating costs in the second quarter and first half of 2011, net of realized synergies from the Merger; increases of $81.6 million and $160.4 million in amortization expense in the second quarter and first half of 2011, respectively, primarily related to the identifiable intangible assets of Valeant and PharmaSwiss; increases of $73.1 million and $132.0 million in interest expense in the second quarter and first half of 2011, respectively, reflecting legacy Valeant debt assumed as of the Merger Date, and the post-Merger issuances of senior notes in the fourth quarter of 2010 and first quarter of 2011 (as described below under "Financial Condition, Liquidity and Capital Resources Financial Assets (Liabilities)"); the inclusion of $27.6 million and $45.2 million of primarily Merger-related restructuring charges and other integration costs in the second quarter and first half of 2011, respectively; increases in non-restructuring-related share-based compensation of $23.7 million and $51.8 million in the second quarter and first half of 2011, respectively, including approximately $16.1 million and $30.2 million, in those respective periods, related to the amortization of the fair value increment on Valeant stock options and RSUs converted into Company awards as of the Merger Date, and $9.2 million related to an equitable adjustment to certain vested stock options awards outstanding as of March 9, 2011, in connection with the post-Merger special dividend of $1.00 per common share declared and paid in the fourth quarter of 2010; and charges of $14.7 million and $23.0 million on the extinguishment of debt in the second quarter and first half of 2011, respectively, mainly in connection with the repurchase of a portion of our 5.375% senior convertible notes due 2014 (the "5.375% Convertible Notes"), as described below under "Financial Condition, Liquidity and Capital Resources Securities Repurchase Program", and the share settlement of the 4.0% convertible subordinated notes due 2013 of Valeant (the "4.0% Convertible Notes"), as described below under "Financial Condition, Liquidity and Capital Resources Financial Assets (Liabilities)". Changes in Financial Condition
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