Biovail to spin off its off-patent products

New York, Nov. 15 - Biovail Corp. said it plans to spin off its branded off-patent pharmaceutical products to shareholders.

The transaction will be carried out either as a dividend in kind or a return of capital and will create a new company, Crystaal Pharmaceuticals Corp., that will acquire additional products, maximize the financial performance of those products and return a significant portion of its distributable cash flows to shareholders as dividends.

Products covered by the spin off include Cardizem CD, Ativan, Vaseretic, Vasotec, Isordil and Tiazac in the United States and Cardizem CD in Canada.

They are not actively promoted by Biovail. The company said they remain well respected by the medical community but their prescription volumes are in decline due to the availability of several competing generic formulations.

Sales were $137 million for the 12 months to Sept. 30 while the associated amortization expense was $43 million.

Ahead of the spin off, Biovail will start paying a quarterly dividend of 12.5 cents. The Toronto-based specialty pharmaceutical company said the dividend policy will likely change when and if the spin off occurs. The first dividend, of 50 cents per share, will be paid on Dec. 14.

"Biovail believes that a spin off of the legacy products allows both for the underlying value of these assets to be better realized and for a more focused growth strategy for Biovail," said executive chairman Eugene Melnyk in a news release.

"The result, after the spin off, is that Biovail will focus on enhancing shareholder value by leveraging its world-class drug-delivery technology portfolio to develop enhanced formulations of existing compounds that offer clinically meaningful benefits to patients and physicians.

"Biovail's strong cash balances, which were recently bolstered by a $60 million supply prepayment from Ortho-McNeil, Inc., in conjunction with the robust cash flows generated by the company, provide us with an opportunity to offer a dividend to our shareholders, while not affecting Biovail's long-term growth strategy."

In preparation for the spin off, Biovail expects to recruit directors and senior officers for Crystaal in the coming months.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.