Eugene Melnyk

Life sciences company Biovail Corp. posted red ink and lower revenues in its fourth quarter, prompting founder Eugene Melnyk to call for a change to the company's board of directors.

The drugmaker said fourth-quarter revenues fell by 34.5 per cent to US$193.96 million, and it reported a loss of $31.97 million, or 20 cents per share, compared to a profit of $117.98 million, or 74 cents, a year earlier.

The company noted that its bottom line had been hit by various charges related to ligitation settlements, writedowns for some of its drug technology assets, and losses on investments, including an $83.1-million charge related to the Dec. 2007 proposed settlement of U.S. class-action shareholder litigation. The charges hurt Biovail's fourth-quarter net income by $104.4 million, and diluted earnings per share by 65 cents.

Excluding those items, Biovail had a net income of $72.5 million, or 45 cents per share.

Full-year revenues and income also fell compared to 2006 numbers, with sales declining to $842.8 million from $1.1 billion, while profits dropped to $195.5 million, or $1.22 per share, from $211.6 million, or $1.32 per share.

The company also saw weaker sales for its Wellbutrin XL antidepressant drug because of the introduction of generic competition.

As a result, Mr. Melnyk, who owns the Ottawa Senators, spoke out about his "ongoing dissatisfaction" with the company and proposed an alternate slate of nominees for election to the company's board of directors.

However, he stressed he would not seek election himself, nor would he be looking to take up a management role.

Mr. Melnyk, who is Biovail's largest shareholder with about a 12-per-cent stake in the company, filed a notice with the U.S. Securities and Exchange Commission saying he will be preparing and mailing a proxy circular to shareholders with details about his plan for replacement nominees.

The disappointing financial results also prompted Biovail's senior management team to announce a comprehensive review of the company's core strategies, "including its global infrastructure, commercialization model, product-development pipeline, acquisition targets, litigation strategy and capital structure."

Part of the plan includes the termination of Biovail's BVF-146 drug, a once-daily combination pain and inflammation treatment consisting of tramadol and a non-steroidal anti-inflammatory drug, which was still in trials.

In a conference call, Biovail CEO Douglas Squires said a sale of the company was unlikely, but possible.