Biovail
Encyclopedia
Biovail Corporation was a Canadian pharmaceutical
company, operating internationally in all aspects of pharmaceutical products. Its major production facility was located in Steinbach, Manitoba
. It merged with Valeant Pharmaceuticals International
in 2010.
featured Biovail in a story about its lawsuit against hedge fund SAC Capital Partners
and Camelback (now known as Gradient Analytics), among others. According to Eugene Melnyk , "there’s a group of people that got together and essentially attacked the company by putting out false reports, and we’re just fighting back for our shareholders."
The alleged conspiracy began with Camelback, an Arizona stock-analysis firm that advertises that it publishes impartial financial reports on companies to help investors evaluate stocks. In the spring of 2003, the hedge fund SAC asked them for a report on Biovail. Darryl Smith, Mark Rosenblum, Demetrios Anifantis, and Robert Ballash, former Camelback employees, alleged that Camelback had allowed their client SAC to determine the content and timing of their reports on Biovail.
Camelback said those former employees were lying and disgruntled, that Anifantis and Ballash were fired because of unethical conduct; Smith for poor performance; Rosenblum was laid off. These four say they were let go after they complained to their superiors about Camelback’s practices. SAC denied all the charges in Biovail's lawsuit and said that the decline in the Biovail's stock was due to earnings shortfalls and regulatory investigations.
In March, 2008, the United States Securities and Exchange Commission
(SEC) sued Biovail and some of its former officers, alleging that "present and former senior Biovail executives, obsessed with meeting quarterly and annual earnings guidance, repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving earnings goals. When it ultimately became impossible to continue concealing the company's inability to meet its own earnings guidance, Biovail actively misled investors and analysts about the reasons for the company's poor performance." Biovail settled for $10 million US. Gradient Analytics
, successor to Camelback, issued a press release stating that the SEC’s suit "confirms the validity of Gradient’s critical analysis of Biovail but raises serious questions about how companies retaliate against analysts with threats, intimidation, and lawsuits."
60 Minutes has been accused of botching the Biovail story by the Columbia Journalism Review
s Audit columnist and the New York Times's Joe Nocera, who felt Lesley Stahl accepted Biovail's conspiracy theories about short sellers without proper consideration.
SAC and Gradient filed a suit against Biovail for malicious prosecution in February 2010.
On May 2011, the Ontario Securities Commission
in Canada
banned Eugene Melnyk from senior roles at public companies in Canada, for five years and penalized him to pay $565,000. Earlier in the same year Melnyk had settled with the U.S. SEC, agreeing to pay a civil penalty of $150,000 US and he had previously paid $1 million U.S. to settle other claims with the SEC.
Pharmacology
Pharmacology is the branch of medicine and biology concerned with the study of drug action. More specifically, it is the study of the interactions that occur between a living organism and chemicals that affect normal or abnormal biochemical function...
company, operating internationally in all aspects of pharmaceutical products. Its major production facility was located in Steinbach, Manitoba
Steinbach, Manitoba
Steinbach is a city of approx. 13,500 people in the southeast corner of the province of Manitoba, Canada, a short distance from the capital Winnipeg. Steinbach is the largest community in the Eastman region of Manitoba. The city is located in the R.M. of Hanover and bordered to the east by the R.M...
. It merged with Valeant Pharmaceuticals International
Valeant Pharmaceuticals International
Valeant Pharmaceuticals International, Inc. is a pharmaceutical company with activities spanning the drug discovery pipeline from target identification through clinical trials and commercialization. The focus of the company is on neurology, dermatology and infectious disease with several drugs in...
in 2010.
SAC/Gradient Analytics lawsuit and SEC complaint
In March 2006, CBS program 60 Minutes60 Minutes
60 Minutes is an American television news magazine, which has run on CBS since 1968. The program was created by producer Don Hewitt who set it apart by using a unique style of reporter-centered investigation....
featured Biovail in a story about its lawsuit against hedge fund SAC Capital Partners
SAC Capital Partners
SAC Capital Advisors is a $14 billion dollar group of hedge funds founded by Steven A. Cohen in 1992. The firm employs approximately 800 people across its offices located in Stamford, Connecticut and New York City with international satellite offices...
and Camelback (now known as Gradient Analytics), among others. According to Eugene Melnyk , "there’s a group of people that got together and essentially attacked the company by putting out false reports, and we’re just fighting back for our shareholders."
The alleged conspiracy began with Camelback, an Arizona stock-analysis firm that advertises that it publishes impartial financial reports on companies to help investors evaluate stocks. In the spring of 2003, the hedge fund SAC asked them for a report on Biovail. Darryl Smith, Mark Rosenblum, Demetrios Anifantis, and Robert Ballash, former Camelback employees, alleged that Camelback had allowed their client SAC to determine the content and timing of their reports on Biovail.
Camelback said those former employees were lying and disgruntled, that Anifantis and Ballash were fired because of unethical conduct; Smith for poor performance; Rosenblum was laid off. These four say they were let go after they complained to their superiors about Camelback’s practices. SAC denied all the charges in Biovail's lawsuit and said that the decline in the Biovail's stock was due to earnings shortfalls and regulatory investigations.
In March, 2008, the United States Securities and Exchange Commission
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
(SEC) sued Biovail and some of its former officers, alleging that "present and former senior Biovail executives, obsessed with meeting quarterly and annual earnings guidance, repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving earnings goals. When it ultimately became impossible to continue concealing the company's inability to meet its own earnings guidance, Biovail actively misled investors and analysts about the reasons for the company's poor performance." Biovail settled for $10 million US. Gradient Analytics
Gradient Analytics
Gradient Analytics, Inc., founded in 1996 by Donn Vickrey and Dr. Carr Bettis as Camelback Research Alliance, Inc. and based in Scottsdale, Arizona, is an independent equity research company.-External links:...
, successor to Camelback, issued a press release stating that the SEC’s suit "confirms the validity of Gradient’s critical analysis of Biovail but raises serious questions about how companies retaliate against analysts with threats, intimidation, and lawsuits."
60 Minutes has been accused of botching the Biovail story by the Columbia Journalism Review
Columbia Journalism Review
The Columbia Journalism Review is an American magazine for professional journalists published bimonthly by the Columbia University Graduate School of Journalism since 1961....
s Audit columnist and the New York Times's Joe Nocera, who felt Lesley Stahl accepted Biovail's conspiracy theories about short sellers without proper consideration.
SAC and Gradient filed a suit against Biovail for malicious prosecution in February 2010.
On May 2011, the Ontario Securities Commission
Ontario Securities Commission
The Ontario Securities Commission is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario...
in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
banned Eugene Melnyk from senior roles at public companies in Canada, for five years and penalized him to pay $565,000. Earlier in the same year Melnyk had settled with the U.S. SEC, agreeing to pay a civil penalty of $150,000 US and he had previously paid $1 million U.S. to settle other claims with the SEC.