Biovail stock falls after analyst cuts rating

Biovail is shifting its focus to central nervous system disorders, and in May, a generic version of its antidepressant Wellbutrin XL reached the market. But CIBC World Markets Corp. analyst Maxime Paris said the challenges of Biovail's restructuring, launches of other generics, and questions about its pipeline mean Biovail has few chances at growth in the next few years.

He downgraded the stock to "Sector Underperform" from "Sector Perform," and cut his price target to $7.50 per share from $12. In afternoon trading, shares fell 81 cents, or 7.2 percent, to $10.44 on nearly twice average volume.

Paris said Biovail's revenue has been in decline since 2006. Adding to that, a generic version of Biovail's blood pressure drug Cardizem LA could be launched as soon as April 2009 by Watson Pharmaceuticals, and Par Pharmaceuticals could start selling a generic of painkiller Ultram ER by November 2009.

The analyst also said Biovail has given few details about the drugs it is developing. Paris said those products include a new version of the antidepressant Effexor and a depression treatment, but it looks like the company is not developing any products with great sales potential.

He added that Biovail has stopped development of five drug candidates in the last year and a half. The only Biovail drug that received Food and Drug Administration approval in that time was Aplenzin, but that drug hasn't been launched because Biovail is still looking for a marketing partner.

The analyst also projected a "long and costly restructuring" for Biovail. The company expects charges of $80 million to $100 million over the next few quarters as it closes some manufacturing facilities and looks into selling nonessential assets.

Calls to Biovail seeking comment were not immediately returned.

The Canadian company is holding its annual shareholders meeting Wednesday. Former Chairman and Chief Executive Eugene Melnyk has criticized the company's financial performance and nominated an alternative slate of candidates to Biovail's board of directors. The company has urged shareholders to take no action on Melnyk's nominees.