Take Advantage of Biovail Weakness - RBC

Investors should take advantage of Biovail Corp.'s (BVF) falling stock price on Tuesday, says Douglas Miehm, RBC Capital Markets analyst.

Shares in the Canadian pharmaceutical company fell almost 2% or 25¢ to C$13.74 on Tuesday after the company announced a failed trial of a new Parkinson's disease drug.

Biovail said top line results from the first of two phase III trials of pimavanserin conducted by Acadia Pharmaceutical Inc. (ACAD), did not meet its primary endpoint for treating Parkinson's-related psychosis. In May, Biovail paid $30-million up front for the rights to co-develop pimavanserin with Acadia.

"Biovail's exposure to the failed trial is minimal, in our opinion," Mr. Miehm said in a note to clients.

The analyst said the co-development deal with Acadia is attractive because only the C$30-million that was paid up front is at risk in the event the drug fails.

"As we have stated from the outset, the pimavanserin investment was a high risk/high reward opportunity. As such, we did not include pimavanserin in our model or valuation," he wrote.

With its limited exposure to pimavanserin, Mr. Miehm said the pull back in Biovail's shares "provides an attractive buying opportunity." He maintained his OUTPERFORM rating and C$16 price target.