Bausch Health Companies Inc (BHC) 2002 Q1 法說會逐字稿

(Webcast Begins in Progress)

... $94 million. At this point I would like to hand it over to to continue the review. ? Hello. , did you want to continue on?

Yes, I certainly will.

I think we had a telephone problem there, and I apologize. As everyone knows, is an two-receptor blocker or known as the class of drugs and it's for the treatment of hypertension and indicated for use either alone or in conjunction with other anti-hypertensives. is on patent until the year 2011 and this allows Biovail to enter one of the fastest growing segments of the antihypertensive market.

The market in 2001 was characterized by growth in excess of 35 percent. As part of this arrangement, Biovail also acquired the rights to HCT which includes a dieretic and that was approved by the FDA in November 2001. Biovail plans on launching this combination product later this year. Combination products like HCT offers physicians additional dosing flexibility for the treatment of their patients. The combination class of and a diuretic were characterized by growth in excess of 50 percent per year in 2001.

During the quarter, we also concluded a $400 million seven and seven-eighths senior subordinated note offering providing the company with an opportunity to pay off all of its previously outstanding cash interest bearing debts and to provide the company with capital for future products or technology acquisitions and for general corporate purposes.

Biovail has also announced the acquisition of a 15 percent ownership position for approximately $65 million in SA, a European based company with leading drug delivery systems. has gained market authorizations for novel medications utilizing their delivery technologies in over 70 countries. Under the terms of the agreement, will develop six novel pharmaceutical products for commercialization by Biovail in North America and Mexico.

These products target Biovail therapeutic areas of focus and unleash market opportunities. will at their expense accelerate the development of these six products through phase three clinicals with the intention of receiving FDA approval and commercialization of the products in the 2005 to 2007 timeframe.

Biovail and have agreed to cross license certain technologies and Biovail is licensing its C form technology and is licensing its flash tab technologies. The companies believe that by combining the two technologies a superior rapidly disintegrating dosage format with a strong patent protection can be further established.

And now I'd like to turn the call over to the more operational side and to talk to you about our activities in the United States. We have fully prepared and trained our sales representatives on Zovirax ointment so that they may begin to take this message to physicians later this quarter.

In addition, we concluded our first full quarter of promoting Wellbutrin SR and the response continues to be very positive from both our partners at GSK and the physician community. Biovail Pharmaceuticals was able to maximize its revenue potential relating to the co-promotion arrangement with GSK for this product.

In March during the American College of Cardiology Meeting in Atlanta, Georgia, we had the opportunity to announce the acquisition of the family of products. This acquisition has strengthened our cardiovascular product line and allows us to leverage our expending sales force. We are currently transitioning from Solve and expect to begin promoting it to physicians by mid June.

In terms of our sales organization, we have completed extensive training programs all 800 reps on board and trained prior to the expected launch of Cardizem XL in the latter part of this year. With regards to Biovail Pharmaceuticals Canada, their first quarter performance was highlighted by continued growth momentum and their pull through revenue for the first quarter was higher than the same period last year and was led by strong Tiazac growth over the same first quarter performance last year.

Tiazac market share has improved over the first quarter a level of 27 percent to a level just above 34 percent in the first quarter of 2002. Celexa growth was also up and we are seeing good movement with Moniker based on its acceptance on several provincial formularies.

In R&D we are initiating two additional phase three studies in osteoarthritis related to our Tramadol submission. Biovail has Phase 3 clinical studies ongoing with respect to Buspirone ER, and Biovail has ongoing developmental programs underway related to a once daily version of Metformin.

All of these programs are progressing well and we expect results later this year at an early 2003. We see our investment in as very positive as it will enable access to different molecules, new formulation technology and new niche therapeutic areas. The new areas being oncology and virology. Our phase four trial in investigating the effectiveness of our chromo-therapeutic product Cardizem XL in controlling the rise in blood pressure during the critical morning hours against other competitive anti-hypertensive products in the marketplace are going very well and should conclude during the fourth quarter and first half of 2003.

Our efforts in conjunction with XL have been very successful and we anticipate filing GSK and NDA for once daily in mid-year 2002. With this in mind, construction has already started on a significant addition to our manufacturing space at , Manitoba.

We will utilize this facility to supply Bupropion in different strengths and package sizes. This expansion will provide additional capacity of over a billion units per year. And now I'd like to turn the call over to , Vice President of Finance for a review of our financials -- .

Thank you, Bill, and good morning, everyone.

I am pleased to describe to everyone Biovail's financial accomplishments for the first quarter of 2002. Biovail reports its financial results in U.S. dollars and under U.S. gap. All earnings per share information discussed today are on a diluted and post split basis.

Canadian gap statements are available for shareholders upon request. Included in Biovail's results are the effects of Biovail's acquisition of the Cardizem brands effective January 1, 2001, the acquisition of from Solve Pharmaceutical effective March 2002 and Biovail's transaction with Glaxo Smith Kline, including the acquisition of the topical line effective January 1, 2002 and the co-promotion of Glaxo's Wellbutrin SR product in the United States.

On a consolidated basis, total revenues for the first quarter of 2002 were $155.3 million, reflecting an increase of 30 percent or $36 million from the 2001 first quarter level of $119.2 million. Net income for the quarter increased 82 percent and was $53.1 million or 32 cents per share versus $29.2 million or 20 cetns per share for the first quarter of 2001.

Now with respect to operating revenue by segment, net product sales revenue for the current quarter were $129.9 million versus $108.9 million for the equivalent 2001 period reflecting an increase of 19 percent. The growth in product sales revenue was driven primarily by sales of the recently acquired Zovirax and products as well as the Cardizem brands, which are all sold by Biovail Pharmaceuticals.

Research and development revenues increased due to a higher level of third party research activity including developmental activities associated with once daily on behalf of and in association with Glaxo. Co-promotion, royalty and licensing revenue increased $10.9 million to $19.7 million for the first quarter of 2002.

The increase reflects the inclusion of a co-promotion revenue related to SR as well as co-promotion revenues associated with Celexa in Canada. The co-promotion revenues associated with Celexa were reclassified to the co-promotion royalty and licensing line to be consistent with the presentation of the SR co-promotion revenues. Gross margins were approximately 72.5 percent for the first quarter of 2002 versus 75.8 percent for the first quarter of 2001.

The change in gross margins is primarily related to product sales mix. In particular Zovirax ointment margins are lower in comparison to other Biovail products. Additionally gross margins were impacted by the exclusion of co-promotion revenues that were previously accounted for under product sales. For the first quarter 2002, research and development expenses were $10.5 million and SG&A expenses were $39.3 million. The 47 percent increase in SG&A spending in 2001 first quarter versus Q1 2001 is primarily due to increases in head count and higher Biovail Pharmaceutical's USA promotional expenses.

The increase in amortization expense of $1.9 million reflects the incremental expenses associated with the acquisition of the Zovirax ointment and product rights offset partially by the reduction in intangible asset values of Keftab and Dura-Vent and the elimination of goodwill amortization effective January 1, 2002 as a result of the adoption of Phase 142. Operating income of $57.2 million increased by 29 percent versus the prior year quarter of $44.4 million.

First quarter 2002 cash flow from operations increased over 70 percent and was $111.3 million versus $65.3 million for the first quarter 2001. During the quarter, Biovail issued $400 million in aggregate principle amount of unsecured seven and seven-eighths senior subordinated notes. This security was assigned a BB- rating by Standard and Poor's.

Also during the quarter, Standard and Poor's raised Biovail's corporate credit and senior security debt rating to BB+ from BB. In addition to paying down outstanding amounts under Biovail's revolving term credit facility, Biovail paid Glaxo $133 million for the rights to the Zovirax ointment line and $94 million to Solve to acquire and HCT.

Biovail also invested $2.5 million in Prosion Viopharma and acquired U.S. exclusive marketing rights to Prosion's topical therapeutic product Fibrostat for scar management. Prosion will develop the product in return for royalties and fees subject to the attainment of certain milestones. Evidda defined its earnings before interest, taxes, depreciation and amortization increased 26 percent to $72.3 million for the quarter ended March 31, 2002 versus $57.4 million for the equivalence prior year period.

Evidda is a non-gap measure that does not have a standardized meaning and as such may not be comparable to similarly titled measures presented by other companies. Effective January 1, 2002 the company adopted Phase Statement 142, which eliminated the amortization of goodwill. Goodwill amortization of $1.6 million and diluted earnings per share of $.01 from the first quarter 2001 results net income and diluted earnings per share increased by 72 percent and 52 percent respectively for the first quarter 2002. This concludes my discussion regarding Biovail's first quarter 2002 performance and at this point I would like to open up the call for questions.

Thank you, sir. Ladies and gentlemen, at this time if research analysts currently covering the company have a question, you will need to press the one on your touch-tone phone and you will hear a tone acknowledging your request. Your questions will be taken in the order that they are received. If your questions have already been answered, you may remove yourself from the queue by pressing the pound key. In addition, if you are using a speakerphone, please pick up your handset before pressing the buttons. One moment for our first question. , please state your company name followed by your question.

Yes. Good morning.

The question revolves around the upcoming American Society for Hypertension Meeting. I wanted to get a feel for what are your plans for the release of the phase three Cardizem XL clinical trial? And I understand you're actually going to be hosting the symposium at one point during that meeting and I was wondering if you could just discuss the opportunities for positioning Cardizem XL particularly since you're going to also see the release of the Pharmacia Convince clinical trial with a similarly delivered form of Verapamil, the nocturnal Verapamil formation. I was wondering if you could put a little context on that upcoming conference.

Yeah. Hi, , it's Eugene here, and first of all I want to apologize for that little technical glitch that we had there.

There is going to be a number of activities at Ash this year, not just the post-year session and a symposium but at the same time it's our intention to also discuss and disclose the various phase four clinical trials that are ongoing with Cardizem XL versus other antihypertensives, so we're going to take the opportunity at that meeting to basically disclose virtually all of our clinical programs. Specifically on Ash and the questions you asked, I'll defer that to Bill Poole.

Thanks, Eugene. I think I'll turn it over to Ken Howling, who is going to be coordinating that conference for us.

Thanks. , a couple of things will take place. Certainly the day of the conference there will be a press release that goes out that will broadly disseminate the results of the trial, et cetera.

There are symposiums ongoing during the conference that we are participating in and we'll be talking about the product as well at the conference there will be a number of activities including something that's going on in the morning, something we're sponsoring as well, we intend to have a presentation of the data with one of the lead clinical investigators to present and provide some color on the data, that's scheduled for 1:30 in the afternoon that day, a number of different activities.

In terms of positioning the product, I think the fact that the convinced data is coming out, you know, we believe that and we certainly hope that will be a positive. We believe the fact that there is more and more dialogue around the fact that Circadian rhythm is important in addressing patient's hypertension and medication dosing regimes. We think all of that is supportive in terms of assisting us with the launch of our Cardizem XL product.

Thank you very much.

. Please state your company name followed by your question.

Hi. Thanks. from UBS Warburg.

Just a couple of hopefully short and simple questions here. I guess the $50 million payments on SR, should we assume those are spread fairly evenly across the four quarters of '02? And second, I guess on Zovirax sales, I doubt you want to bring that up, but were you satisfied with the sales for the quarter on that product? And I guess third, any update on any clinical data or clinical presentations on flash dose Prozac clinical trials? Thanks.

In terms of the $50 million, , the, if you will, how that is earned is based on detailing activity. You know, it's not a fixed piece, it's not a straight-line allocation over four quarters. It is in fact the opportunity to earn up to $10 million over five quarters and that's certainly something that has to be earned, and is earned, we believe, will be earned through the detailing of the products.

So if we're as successful as we expect we will be on detailing, it will be roughly $10 million per quarter over a five-quarter period. Zovirax sales of course we just acquired the product. We are anticipating getting samples from GSK later this quarter, such that we'll be able to actively get out and detail the product to physicians.

Of course we believe the sampling will enable us to create greater awareness for the product and increase the market share and prescription trends for the product but until that time, we're happy with the performance of the product. But again, until we have the samples, which we expect later this quarter, you know, we'll be supporting the product that way at that time. In terms of clinical data, on flash dose, be it Prozac or other products, we have not released that clinical data. We do expect to be filing a flash dose version of Paroxetine or Prozac in the middle part of this year.

Paroxetine would be .

I'm sorry on the Prozac product.

I thought flash dose Prozac was already filed.

Yeah, I'm confused too. We haven't released the clinical data on the Prozac.

Again, there are no plans right now at some venue, I guess you haven't decided yet how you're going to release that clinical data.

To my knowledge, that's correct.

OK. Just one other quick question, if I could just sneak one more in. You know on the conference call yesterday mentioned that within their internal budgets, you know, they're basically baking in a July generic Tiazac launch, I'm wondering if you can just remind us again what your plans are for and I guess in relation to your earnings guidance for this year, if you could just discuss that a little bit further. Thanks.

Sure, happy to. You know, as we have anticipated, I think everyone has anticipated that at some point there would be a launch of generic Tiazac. We've already based that into models and I believe most, if not all analysts have also baked that in. I think most people have assumed a Q3 launch of generic Tiazac by ourselves, by and we would expect that overall our Tiazac franchise for 2002 would be close to or slightly below the level of revenues we saw for the Tiazac franchise in 2001.

OK. All right. Thank you.

, please state your company name followed by your question.

I'm at JP Morgan and my first question is, can you remind us which of the products show the most seasonality and why there is always that sequential dip in your top line going from Q4 to Q1? And also, , if you can just do your usual rough breakout by percentages for your different franchises so we can have some idea of which divisions did best?

Sure. I'll jump in with the product sales mix. I'll give you percentages, and this is a breakdown of the product sales revenue line.

Tiazac was roughly 5 percent to 10 percent of total product sales.

Cardizem was approximately 40 percent.

Generic products were between 25 percent to 30 percent.

Our Canadian business was less than 5 percent of total product sales.

Biovail Pharmaceutical's USA including the , Zovirax acquisitions was between 20 percent and 25 percent and other revenues, Neurotrend, Melvyn, et cetera, were less than one percent.

Great. And the explanation on the seasonality?

, do you want me to jump in on that?

Yes, please. , really, the seasonality really ties into year-end expectations by the wholesalers. It's been something that has plagued the industry for a number of years and that is anticipation of price increases and inventory adjustments. It really has nothing more than that involved with it. We tried to smooth it out as best we can and sometimes we're more successful than others. But that usually is the answer to that question.

OK. And then ...

, and I think if you looked at historically the numbers over the last four or five years, we've always had that same trend and it started back in the days when was our largest client ordering Tiazac and there was always a significant third and fourth quarter fill orders.

It's more from wholesaler buying patterns or in that case Forrest buying patterns than it is for true fluctuations and user demand for your products.

That's correct.

And my next question, probably more for is just, I know you gave a little bit of an update on the progress of the sales force, but once you have everybody on board, maybe you can go over how you plan to prioritize the details to physicians of all the different products that you have right now, Wellbutrin, Zovirax, , are there going to be two different sales forces out of that 800 or is it going to be one big 800 rep sales force?

Yes, I will be happy to talk about that. Our plan right now will be to certainly concentrate on XL with our full sales organization and then we'll look at category two or position two, position three for our other mix of products and that will of course bring into mind the seasonality of some of our products.

And then lastly, especially on , how are you going to market that against all the big competitors out there? And do you think that Merck's results with Cozaar's life trial is going to help or hurt 's potential?

I can't say for certain how Merck's data will help or hurt for sure. We are pulling together the marketing plans for and be happy to share them with you at a later date. But right, for now, I would prefer to hold off on the details of our plan. We do think we're putting together a very strong program for positioning it in the marketplace and I believe that we will be able to make some good in-roads with this product. But I would not want at this point to get into the details of that promotional program.

Great quarter, guys. Thanks.

, please state your company name followed by your question.

, are you there?

Actually sir, he just disconnected from conference. , please state your company name followed by your question.

Sure. RBC Capital Markets. Just a couple of housekeeping items first, . With respect to R&D, it seemed to be a little bit lower than anticipated this quarter, I was wondering if you could talk about if you still expected to be between 8 percent to 10 percent for the year. Same thing on the tax rate and why there was a decrease in current assets and then maybe a larger item for Eugene just with respect to plans in the future in terms of the acquisition of future products. If the focus is going to be on combination types products patents versus maybe what you've been doing in the past from a strategic perspective. Thanks.

I'll start off, I guess. , absolutely we do expect R&D spending on the year to be in that eight percent to 10 percent range. Tax rate again is as expected, it was right around seven percent. Our guidance has been in that range seven percent to eight percent and creeping up as a result of acquisitions and a higher propensity of our revenues occurring in the US marketplace but at the present time, it's still in that seven percent, seven percent to eight percent range. What was the third, ?

Oh, just current assets, there was a significant drop that contributed to the cash flow of this quarter. I was just wondering what that related to?

The biggest difference is in accounts receivable.

Great.

OK, now, . Just on the plans for the future products, we are considering a number of new product ideas. Specifically you can see what we recently announced with the investment into .

There are a half a dozen product ideas that are being pursued. We are also pursuing the whole concept, a number of combination products, specifically in the cardiovascular field. The one caution there is that they are very complicated clinical trials, very expensive and we are still assessing on a number of fronts the physician acceptability of some of these ideas. But we're certainly pursuing a number of combination product ideas and we hope to have something coming forth pretty soon.

OK. Great. And just finally on the Buspirone, those results should be out when, exactly?

Those trials we expect to be complete at the end of this year. So at least internally we expect to have them end of this year, early next. Exactly when we would share that data is something we'll decide in the future.

Thank you.

, please state your company name followed by your question.

Yeah, Bank America Securities. One, can you give us a breakdown of product sales? And two, can you at least give us, I know you broke out the product sales categories, but some sense of the growth rate between the various categories so we know where the growth is coming from?

Yeah, I can give you the product sales breakdown again . The percentages I'm about to give you are percentages of the total product sales line, not total revenues but product sale. Tiazac about eight percent to 10 percent.

And that was on how much year over year?

I don't have the growth rates exactly in front of me. That historical information of course is available and I can, you know, talk to you off line. Cardizem represents approximately 40 percent. Generic products were in a range of 25 percent to 30 percent. Canadian business was under 5 percent. Biovail Pharmaceuticals USA was in the range of 20 percent to 25 percent and other , et cetera, less than one percent.

OK. I hate to bring up a sore subject obviously, but there are rumors going around that the Canadian regulatory authorities are also looking at your patent activities, is that true?

No. We aren't aware of any kind of regulatory body of any sort in Canada looking at any patent activities. The only thing we do have is a patent litigation ongoing with a company that has filed a Tiazac generic, but that is a standard straightforward patent litigation.

OK. Thank you.

, please state your company name followed by your question.

Yes, Merrill Lynch. This may be a question really for , but in his absence, maybe . Just in terms of the Federal Trade Commission settlement that you announced recently, there is a requirement to divest the Dove patent and also a requirement to consult with the FDC prior to certain patent filings. And I'm wondering, can you maybe give us a sense of how this impedes or doesn't impede your business activities going forward on both of those issues?

Sure. We actually have on standby in case a much more complex question came up. But I can answer those because they're pretty straightforward. There is a requirement to divest the Dove patent or covert it into a non-exclusive patent. But the main purpose of that was of course to drop the patent litigation and therefore remove any kind of regulatory illegal hurtle for the introduction of a generic Tiazac.

Would that prevent you from, for example, working on other Diltiazem combinations?

No, absolutely not. No. No. Nothing like that. It's specific to the Dove patent. So we need to divest ourselves.

With respect to any future activity, it's very, very remote that we would even have to do this. But it's a simple notification, very similar to an HSR, a Hart Skar Rodino notification, it has to go to the FDC. In the event that we were to acquire a patent for an already approved product where an ANDA has already been approved, anytime going forward when we do acquire products, virtually every single one of those require an HSR approval anyway. Anything over a $50 million threshold requires it, so it doesn't impact us at all other than a notification that requires a 30 day review and a possible 30 day extension.

Thanks.

, please state your company name followed by your question.

National Bank Financial. Just a quick couple of housekeeping questions. With respect to the quarter, , were there any generic Tiazac shipments this quarter or are you expecting any in the second quarter in preparation for a July launch of generic Tiazac?

Well, I won't speak about our strategies going forward, but certainly in Q1 of this year 2002, we did not have any shipments of generic Tiazac, no.

And then, anything on the FDA with respect to generic Pericardia or Adalat? And is there any litigation ongoing there between you and the brand companies?

There is the standard ongoing patent infringement litigation between the innovators for Pericardia XL and Adalat CC, that litigation continues. But we do expect to have the 90 mg dosage strengths for both of those products in the marketplace later this year.

And then just finally, I think for , on the Tramadol, , perhaps I was mistaken, but I thought I heard you say that you just started a phase three on Tramadol for osteo-arthritis, is that correct?

Yes, , that is correct.

Was that trial not already done? And my understanding at least from the last conference call was that the trials that you were currently ongoing with the Tramadol were just sort of long-term, you know, a few patients with short-term dosing, a few patients with longer term dosing, that was all that needed to be done. Is this a change from last quarter?

No. I don't believe it's a change. What we're doing is two studies on Tramadol. They are in place and there has not been a change.

Yeah, , we've already completed, I think we've announced that two clinical trials. There is an additional two. One of them, well, first thing is first, we need to have the absolute number of subjects that have gone through clinical trials up to 1,500. And that's in line with ICH guidelines, so these are extended trials or we've expanded on these trials to meet those requirements. So, no, since the last time we talked, nothing has changed.

OK. And are those still expected to be complete by the first quarter of next year?

Yes, they are. I mean, if all the patient enrollment keeps moving along like we expect it to, we should have those completed by the first quarter.

One other comment, , about this July Tiazac launch, I just want to caution you. I believe the comment that came from was a July launch potentially of their generic. I don't believe, or we don't believe that there is going to be a July launch of Tiazac generic. It may be later in the year, but you know, for budgetary purposes we put it in, but I just, I wouldn't count on it happening at that time.

OK. And then just on the Tramadol , of the 1,500 patients, can you give us sort of a sense of where you are at with respect to enrollment?

I think we're over 1,000, but I can't be sure. Don't take me on that number. But it's well along because I think the first couple had 500 or 600 or 700 already and then we started a new trial and then there is a further trial. And the other thing I just want to mention on Tramadol is the fact that we're looking for expanded indications as well. So there is multiple indications that are being pursued through these trials.

OK. Great. Thanks you.

, please state your company name followed by your question.

Thanks very much, it's from Goldman Sachs. With respect to the pre-launch promotion ahead of Cardizem XL, could you give us some guidance as to if you've begun to spend for it yet and how you see that unfolding over the course of the year? And additionally with respect to the 500 rep sales force expansion you've targeted, I may have missed it earlier but could you update us on where you stand in terms of the hiring of new reps?

Sure. I'll let discuss that, , but one thing I can tell you, yes, we are spending money already on pre-launch activities. There is all sorts of monies being spent on sales and marketing plans being implemented, definitely we're spending money there. , why don't you walk through the sales force expansion?

Not a problem. Thanks, Eugene. , with regards to our expansion, it's going extremely well. We've just concluded a training class just a week ago. We have another group coming in in another three weeks. We're absolutely on schedule so it's going very well, that's all I can tell you. We're very pleased with the progress and the quality and caliber of the individuals that we're bringing in.

Well, that's excellent . Can you give us a sense for how many completed the training class?

I can tell you that in the first training class that we had two weeks ago, there were in excess of 150 people.

Terrific. With respect to once daily, I know this NDA filing is in Glaxo's hands right now, but they indicated on their conference call that they thought the filing would take place in the second half of 2002 and I think when you signed the deal with Glaxo last October, you originally expected it to take place in the second quarter. Can you give us a little clearer picture on what's happening with respect to that filing?

Yeah, we can because we have, you'll use as late as last week, but I can tell you there is still some questions that we're waiting for feedback back from the FDA, but when we talk about second quarter, they're talking second half, we are literally we are straddling those two quarters and that's kind of our timing.

Now, it may be advantageous to wait an additional 60 days for further data to file all at once since they control that filing, they make the decision as to how they're going to proceed on that. I can tell you that the expectation though for a review is approximately ten months so as far as a launch date of that product, although we can't talk specifically because again these are GSK plans, it really doesn't impact the launch date for it and certainly doesn't impact our expectation of manufacturing for next year. Just a little more on that, we are expecting within the next 60 days and certainly by our next conference call to begin providing some guidance as to the manufacturing revenues that we expect in 2003 from this product and those manufacturing revenues we expect to start as early as the second quarter in anticipation of a launch in the latter half of the year.

So I can tell you that just touched on it, we were dramatically expanding our manufacturing facilities to accommodate that product launch both in Steinback and down in Dorado. So we're well on our way and that's basically the discrepancy, you're talking about a straddling of the quarters.

That's great. Thanks for clarifying that. On the generic side, I know that you file an ANDA for generic Tegretol XR in January of 2001. Do you have any update on how that's progressing with the FDA and if this will be out licensed to Teva?

Yeah. We expect approval for that product pretty soon. We will not be licensing that out to Teva. We are in discussions with multiple parties on the licensing of the product.

Great. And then one last question, if you wouldn't mind just quickly running through the timelines for the NDA filings now for flash dose Paroxetine, Zovirax cream, Tramadol once daily, Buspirone one daily and Metformin once day, that would be great. Remember all of those?

Let's go through that one more time. The Zovirax cream, , when was that ...

The Zovirax, the virus cream has already been filed.

Great.

The Tramadol we're expecting the first half of next year and had asked earlier whether, if we complete the trial by the first quarter it's going to be a first half filing. Which other ones did you want to walk through?

Buspirone. I think we were looking for something later this year.

Yeah, assuming again that the clinical trials are completed and of course whether the clinical trials on Buspirone are successful, then we would expect an early 2003 filing. And again, that one we have to be very cautious about because it is a depression trial and those are a little riskier than the Tramadol and certainly the Zovirax ones.

Flash dose Paroxetine, I think that we've seen some slippage in that, I think we originally expected it in the first quarter. Do you think now it will come in in the third or fourth quarter of this year?

Yeah, definitely. That's all we're doing is just making sure that all of the data, we're doing more than we have to make it an absolutely perfect submission, a perfected submission.

Great. And then just lastly on Metformin once daily, I know these are longer trials then average, can you give us a sense of when you think an NDA filing could take place for that product?

We're had to prioritize all of our products, you know, there is only so many clinical trials that we can do at any one time and as you I guess heard that we've got, you know, we've got three phase fours on Cardizem. We have two on Tramadol. We have Buspirone trials going. So we've basically prioritized those products. This product, you know, is an important one but we're looking at a 2003 timeframe for that. It's a question of how much we can do and how much we can spend in any one year. So we've tried to spread out that spend and we're looking at 2003 for that product.

Late '03, early '03?

I would say mid to late.

OK. Thank you, Eugene.

Oh, you're welcome.

, please state your company name followed by your question.

Hey, good morning. from Salomon Smith Barney. I have a question but you just caught me by surprise on Zovirax cream by saying that's already filed.

Yes. The submission is in. We're just waiting for some feedback from the FDA on clarification of any issues that they might have.

OK. Excellent. That seems a little bit faster than anticipated that I had previously thought maybe mid year.

Well, I'm not sure why the mid year, but we had always said in the first half so maybe that was the misunderstanding.

OK. Excellent. And then my real question was more along the co-promotion royalty licensing income line and the, you know, taking the Celexa co-promotion in Canada and moving it into that line. Are the historicals for 2001 available there, , so we know what we need to change in our model?

Yeah, you'll be able to track that, basically, if you look at product sales for Q1 2001, as we reported today versus the product sales that we reported back in April of last year. You'll see a difference, I believe, the different is about $3.5 million to $4 million.

It is pretty steady going forward if I wanted to adjust to '02 through '04?

It's not totally linear but at the end of the day, it's somewhere between $15 to $20 million on a total year basis. OK?

And that does have an impact on the margins, so historically where you've seen margins, you know, a 76 percent range, 77 percent range, by pulling obviously that out of the product sales, it lowers product sales, it lowers therefore the gross margin, but keep in mind by moving that revenue down to the co-promote line, it of course all falls to the bottom line. So where historically you were including say Celexa co-promote revenues and product sales, you were only taking 75 percent or 76 percent of it. Now as it always has, it's always fallen right to the bottom line. So there will be a slight, from a historical perspective, margins will come down a little bit but not profitability.

Excellent. And then on the Manitoba facility or the manufacturing facilities expansions, are those paid for by Biovail or Glaxo?

No, those are paid by Biovail. But they're of course factored into the cost, into our transfer pricing, I mean, that was all thought through. Total cap backs on those expansions is approximately $10 million.

Great. That's very helpful. Thank you.

, please state your company name followed by your question.

Hi, B&L Investment Firms. , I have a question regarding your sales breakdown regarding Cardizem.

How much of the Cardizem would be in Canada, because if I use the 40 percent, I get $52 million, which would be much higher than anticipated and I'm just wondering why that is?

There is a component in Q1 that relates to Canada. I haven't broken it down for you, but there is a component that does relate to that.

And what kind of size would Canada be?

I haven't broken down that relationship between US versus Canada. It is, you know, it's down from Q4 levels, but you know, Cardizem as it has done continuously since we bought it, still tracks very nicely for us.

OK. And when you talk about Canadian being less than 5 percent, you exclude Cardizem and Celexa on that?

Yes, that is correct. I'm excluding both Cardizem and Celexa, yes.

And can you just give us some color about going forward regarding SG&A increase, you know, in line with the southward expansion and marketing expenses, how much of an increase can we expect quarter to quarter going forward? What should we be tracking, looking to?

Well, we continue to believe that our SG&A will be in line with the previously stated guidance of a 20 percent to 25 percent range on total revenues. And of course within that range we do see SG&A escalating over the course of the year but of course so far revenues.

OK. And you're waiting for just a couple of additional strengths approved on your generic Naphetapines, any timelines for that?

Yeah, I believe both cc 90 mg and XL 90 mg will be in the marketplace later this year, certainly by the end of this year.

OK. And my last question is, can we expect any further GSK R & D funding for the rest of the year?

Yes. We do expect that to occur. That is part of the relationship.

And, same kind of magnitude we've seen in Q1?

I would imagine so, yeah.

OK. Thank you.

, please state your company name followed by your question.

Hi. Good morning. I'm from Parodyne Capital. Just two quick accounting questions. I guess since the change in the rule regarding the amortization of goodwill, are you putting the GSK $133 million payment into instead of an expansion, are you kind of just putting it back into intangible assets? And I would like to know what kind of timing should we expect that to be expense or when would that eventually show up in the income statement?

The product rights associated with Zovirax are capitalized, that $133 million is not treated as goodwill under the accounting rules, it is a product right and therefore it is amortized over the period of time and that period of time is ten years.

OK. And that's also impact on the investment cash outflow in I guess Q1 02, right?

Yeah, it was part of Q1 '02 yes financing activities, absolutely.

And what's the total shares outstanding? I know you reported the weighted average, do you have an approximate number of outstanding fully diluted shares at the end of the quarter?

Well, outstanding is about $152 million and fully diluted was disclosed to just about $166 million.

And finally for the Biovail USA, the product included in the Biovail USA, what are those products again?

Yeah, those products include the Cedax product line, , and Zovirax and Rondec, excuse me.

Thank you very much.

Pleasure.

, please state your company name followed by your question.

Sure, it's Research Capital and just had two questions. One is if you could just give a rough breakdown of the co-promotion on royalty and licensing line and then also just notice that for the fourth quarter your revenue went down by about $5.1 million, just wanted to know what that was attributed to?

Yeah, certainly. On the co-promotion, we did earn the full amount under the relationship with Glaxo, so there is roughly $10 million, over $10 million from Glaxo as it relates to that. The Celexa promotions were, the revenue from that were in line with last years so in the $3 to $5 million range and the balance were royalties.

, please go ahead with your follow-up question.

Just as it relates to Cardizem XL at the FDA, given that the FDA seems to be reluctant to approve a lot of things these days, can you give us some sort of comfort on your dialogue with the agency and is there any reason that we would be, should be concerned about approval timelines? And also, was it filed as a 505B or was it just a new straight NDA?

It was filed as a new straight NDA and no, there is nothing that we are aware of that should be concerning us or any investors. We do expect an approval later this year. There has been no issues. We know the study results, we're very familiar with the drug having a lot of experience with Diltiazem so no, there is nothing, there is no real expectation of anything negative.

You said that Wellbutrin XL you might expect that that be slated for a ten month review, have you had said anything similar about Cardizem XL?

No. We know that the date is sometime mid this summer, but no we don't have that specific, that kind of specificity.

OK. Great. Thanks.

, please state your company name followed by your question.

. I just had a quick question on Keftab, can we get an update there? And I was wondering if there was any sort of settlement in the quarter and also curious to know on the Tramadol, those trials your starting, is that with the same formulation that you've used in the earlier trials, or is that a new formulation that you might have gotten from ?

No. It's the same formulation, you know, the same formulation as the previous studies were done on. And I'm sorry , what was your first question?

Just with regard to Keftab, has there been any settlement there with Lilly?

No. There is no settlement and there were no settlement dollars in the first quarter. So that's just going through as a straightforward litigation.

OK. Thank you.

You're welcome.

, please state your company name followed by your question.

Hi. , first of all I was a little confused, you said Cardizem CD was, I think we were seeing about $52 million in the quarter, and you said that was down from fourth quarter levels.

I thought that that was up from fourth quarter levels, so if you could just clarify that. Second of all, on the sales reps, you said that 150 are just coming out of training, so that adds to the 300, so should I assume around 450? And if that's the case, what are they going to be marketing until Cardizem XL, just kind of give us the sense of, you know, the one-two there.

And on Tramadol, let me just make sure I understand something, we had the two trials that were completed and we saw data that came across on a press release over the past year and my understanding is that there were open label studies that were going to be ongoing until the end of the year in order to get the, you know, the requisite number of patients for ICH guidelines and a filing was supposed to be late this year, early next year, so I just want to make sure that, I mean, have you guys made it a new decision on different types of trials or did I just misunderstand it the first time? Thanks.

OK, , let me answer the first question on Tramadol because it's pretty straightforward and I think Bill can talk a little bit more about what the sales force is going to do and, you know, between now and the XL launch. The Tramadol we have added an additional trial and expanded the initial one by the number of patients. We needed more numbers to meet those ICH guidelines. We've also included in the trials an additional indication that we're going to be pursuing and that's basically it. I mean, the additional time that it's going to take to add this additional trial and expand the first one is . So when we're looking at pushing something out, we're looking at somewhere towards the end of the first quarter into the second quarter of next year. And that assumes that patient was fine which up until now has been going very well. Bill, do you want to just talk about the ...

Yeah, no problem, Eugene. , with respect to the sales organization, the ones that are just coming out of their training programs are deployed into their territories, they'll be spending a number of weeks getting around those territories, clarifying what it is they are doing and of course we're looking towards the latter part of this quarter to start the promotion of and once we get, as had mentioned earlier, once we get fully up to speed on the samples with Zovirax, then they'll be starting that as well. Don't forget as well that we are still finishing off a little bit of Cedax so they're keeping busy with that respect, with that product as well.

So we are around 450?

Oh, I'm sorry. Yes, the number is, in the 450 range is a good number, yes.

And one other question, . Earlier you were talking about Ash and I was just a little confused on exactly which day things were happening. I'm familiar that the poster session is Saturday morning. There was something at you mentioned, I wasn't sure which day you were referring to. Maybe you could just kind of tell us exactly which days we need to be there in order to participate in Biovail events?

Sure. Pleased to do so. Also on the Friday, May 17th, there are a number of activities, the abstract is presented Friday morning, symposiums ongoing on Friday and we are planning small analyst event on the Friday, we're targeting right now at 1:30, we hope to finalize those plans so that we can talk to you more about that in the coming days. But certainly we are planning on doing something Friday afternoon. One of the lead investigators available to not only present the data but be available for questions and answers and provide any additional information that people might be interested in.

Thanks.

, please go ahead with your follow-up question.

Great. Thanks very much. I had one quick question to clarify the number that you reported for the co-promote. I think you mentioned in the quarter it was roughly $10 million, I seem to recall that in the fourth quarter, you booked revenue but pushed it into the first quarter so I was curious if the $10 million includes some of that revenue or if there was some incremental amount for the Wellbutrin SR co-promote?

The co-promote revenues in Q1 '02 relates specifically to co-promote revenues and activities that occurred in Q1. Any of the revenues or amounts from Q4, you know, that came into Q1 basically related to the developmental work and the developmental activities that took place in Q1 '02.

So the revenue was booked in the fourth quarter?

No, there were no revenues booked in the fourth quarter related to the arrangements with Glaxo, nothing. No, there was nothing in the P&L.

OK. So there was additional income above the $10 million for other developmental work related to the manufacturing? Is that ...

That is correct. In the co-promote royalty and licensing line, there was $10 million as it relates to the promotional activities around Wellbutrin SR. In addition, in the R&D revenue line, there was some revenue associated with the developmental activities on Wellbutrin once daily in the R&D revenue line.

Great. Thanks, .

Sure.

Ladies and gentlemen, if there are any additional or follow-up questions at this time, please press the one on your touch-tone phone. , please go ahead with your follow-up question.

Can you give us some ideas on price increases that have occurred over the last six months for Zovirax and the Cardizem?

Do you want me to take that ?

Yeah, sure.

, in terms of Zovirax, there was a price increase in January of this year in the double-digit range and that was for Zovirax. And on the Cardizem, there was no price increase this year in the last six months.

This would include Q4 last year, right?

That's correct.

OK. Thank you.

, please state your company name followed by your question.

Yes, , and I'm sorry, I had a phone problem earlier. , a follow-up on the Zovirax price increase question, and we launch later in this quarter, are you anticipating additional price increases as you re-launch and reposition the product?

At this point, we're only considering that, . No firm, as I stated, we just put one in in the first quarter, so there is no firm plan to put one in the second quarter on anything like that.

OK. Great. Thank you.

At this time I am showing no further questions. Please continue with any closing comments.

Well, thank you, everyone for joining our call today and especially to the employees of Biovail who contributed to this record quarter which -- we know that they listen in to these calls and I'd like to thank them on behalf of senior management and the directors. Again, thank you very much and look forward to having everyone on our second quarter conference call in about three months time. Thank you very much.

Ladies and gentlemen, that does conclude today's Biovail conference call. You may all disconnect and thank you for participating.

END