Whatever happens in court, the battle for Biovail Corp. (BVF) has almost certainly been won by the incumbent board of directors, says John Maletic, an analyst at Scotia Capital.

The drug maker's annual meeting was thrown into chaos on Wednesday after founder and largest shareholder Eugene Melnyk tried to delay the meeting by withdrawing his participation. Mr. Melnyk is leading a group of dissident shareholders trying to replace the company board with their own slate.

But Biovail went ahead with its meeting anyway, announcing that its slate of directors captured nearly 98% of the vote. Mr. Melnyk fired back by suing the company to force it to declare the vote invalid. According to Mr. Maletic, the tactic will only delay the inevitable.

In a research note Mr. Maletic said:

While the actions of Mr. Melnyk may indeed invalidate [the] meeting and force and additional one at a later date, it is unclear to us that the results of the vote will be any different.

On the downside, the continuation of the proxy war will be "an unwelcome distraction for current management," he noted.

Mr. Melnyk, who owns about 11.6% of the shares, launched his battle to change the board in the spring, arguing the incumbents have mismanaged the company. He has vowed to start a new pharmaceutical company if he loses the fight. Trimel Pharmaceuticals will pursue the strategy that he wanted for Biovail and it will be funded with up to C$100-million in capital.

Given that the difficult odds Mr. Melnyk is facing in his proxy battle, many analysts have begun to question how long he will hold onto his Biovail shares.

Mr. Maletic has maintained his "sector perform" rating with one-year target price of C$16.

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