A new class action lawsuit that claims Biovail Corp. misled investors concerning an anti-depressant formula was filed recently in a New York court. It’s alleged in the suit that Biovail misled investors about the regulatory approval status of its BVF-033 treatment, a salt formulation version of the generic antidepressant Wellbutrin XL. It’s also alleged that Biovail failed to disclose that, while the U.S. Food and Drug Administration required a single dose study of the effectiveness of BVF-033, the company had in fact submitted a multiple-dose study. The Plaintiffs say that Biovail’s FDA application for BVF-033 failed to meet the requirements set forth by the regulatory agency. The company, according to allegations in the suit, failed to inform investors that FDA approval would be delayed.

The suit covers the period between December 14, 2006 and July 19, 2007 and seeks to recover damages on behalf of purchasers of the company’s shares. Biovail shares dropped more than 20% on July 20, 2007 to $20.03 from $25.51 the day it received a non-approval letter from the FDA concerning the treatment. It should be noted that this is not Biovail’s first rodeo when it comes to regulatory and shareholder suits.

The U.S. Securities Exchange Commission has already investigated a Biovail warning of a revenue shortfall following an October 2003 truck accident involving a shipment of Wellbutrin antidepressant, and the company’s disclosure of the impact of that accident on its 2003 results. The SEC said Biovail executives had been obsessed with meeting quarterly and annual targets, and that they had overstated earnings and hid losses to deceive investors. Biovail agreed to pay $10 million to settle the case, but four current and former officers still face charges. Earlier this year the company agreed to pay $24.6 million to settle a case in connection with the commercial launch of its Cardizem LA heart drug.

Source: Reuters

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