June 3 (Bloomberg) -- Biovail Corp. founder Eugene Melnyk wants former Chief Executive Officer Bruce Brydon to return to the Canadian drugmaker to revive what he calls ``a broken company in desperate need of change.''

Melnyk, 49, nominated Brydon to resume his management post and seat on the board of Canada's largest publicly traded drugmaker alongside nine new directors, according to a filing late yesterday. Brydon, 61, ran the Mississauga, Ontario-based company from 1995 to 2001 before retiring.

Shareholders will choose June 25 between Melnyk's slate and Biovail's 10-member proposal that includes five new directors. Melnyk said March 13 that he would offer his own nominees because of dissatisfaction with the company's financial performance and lack of confidence in management. Biovail has lost more than half its value since Melnyk retired as chairman last June after allegations of violations from securities regulators.

``I'm very, very disappointed in what's transpired at the company for the last couple years,'' Melnyk, Biovail's largest shareholder, said in a phone interview yesterday. ``My pleas for change have gone on deaf ears; enough is enough, it's time for a change.''

Biovail gained 11 cents, or 1 percent, to $11.72 at 4:03 p.m. in New York Stock Exchange composite trading. The company fell 54 percent in the past 12 months after reaching a high of $56.25 on Dec. 31, 2001.

Company Response

The company urged investors to ignore Melnyk's proxy filing, which ``contains a number of incomplete, misleading or incorrect statements and should be viewed with skepticism,'' according to a statement from management today.

``Shareholders should ask whose interests Mr. Melnyk's nominees are intended to serve -- the shareholders of Mr. Melnyk?,'' Chairman Douglas Squires said in the statement. ``We believe shareholders will recognize the Melnyk nominees for what they are and should reject a return to a Melnyk-dominated company.''

Biovail's first-quarter profit dropped 40 percent on lower sales of drugs including the antidepressant Wellbutrin XL and blood pressure medicine Cardizem LA. William Wells, the former supermarket executive who took over as CEO May 1, said Biovail will shut its Puerto Rico plants and fire 250 workers as part of a strategic shift to spend more than $600 million through 2012 to research disorders of the central nervous system, including Parkinson's disease and multiple sclerosis.

`Pharmaceutical Suicide'

The Puerto Rico facilities are critical for manufacturing capacity and the market for central nervous system drugs is too crowded to be profitable, Brydon said.

Melnyk called the strategic shift ``absolute, pharmaceutical suicide,'' for a company the size of Biovail, whose market value has slipped to $1.87 billion.

Melnyk's supporters instead recommend investing in hard-to- formulate generic drugs, reformulations of existing products that can be licensed back to brand-name companies and copies of genetically engineered biotechnology medicines, according to the proxy filing.

``You have a company that has failed to deliver any meaningful results,'' Brydon said in a phone interview. ``Put the track record of the company while I was there against the current track record. I would never imagine as a shareholder that you wouldn't vote for the proposed change.''

Shares and Senators

Melnyk owns 18.8 million Biovail shares, or a 12 percent stake valued at about $220 million. He also owns the Ottawa Senators of the National Hockey League. It's too early to say how many other shareholders support Melnyk's nominees, said Brydon, who owns 5,400 shares.

``I have confidence that my slate will be elected,'' said Melnyk, who considered a purchase of the company before opting to propose a new management team.

Melnyk and three other executives were accused by U.S. regulators of fraud in March, partly for blaming a missed earnings forecast in 2003 on a fatal truck accident. He is also defending a 2003 complaint filed by a former analyst who claims Biovail falsely accused him of criminal misconduct after the analyst issued critical research reports and the company fell in trading.

In the past six months, Biovail has settled a criminal investigation and securities fraud class-action lawsuit brought by investors regarding improper marketing of Cardizem LA.

``Management has kind of put Eugene up as a scapegoat,'' Brydon said. ``These guys were accountable and on their watch all of this happened, and I don't see how they're going to stand in the light of day and blame everything on one person. It doesn't make any sense.''

Melnyk doesn't plan to seek election or a management position at Biovail, according to the proxy filing.

To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.

Last Updated: June 3, 2008 16:34 EDT