Valeant Shares Tumble Again – Board to Examine Pharmacy Ties

Valeant Pharmaceuticals International (VRX) Monday said it will form a special committee to examine its ties with a specialty pharmacy.

Screenshot 2015-10-26 10.31.47

After selling off in premarket trading on Monday, Valeant shares briefly turned positive, and then resumed their slide to drop by nearly 6%.

The pharmaceutical giant’s executives including CEO Michael Pearson held a conference call with investors to respond to all the news of the past week.

In premarket trading, the stock dropped by as much as 13%. Valeant shares have fallen nearly 35% over the past week.

To recap last week’s news: Short-selling firm Citron Research asked whether Valeant was the next Enron. In a scathing report, Citron alleged that the company used fake invoices to stoke its revenues through its relationship with Philidor, a specialty pharmacy that appeared to have Valeant as its only customer.

Valeant issued a statement last week saying that all transactions with its network pharmacies were not included in its consolidated financial statements. It said the report was an effort to drive down its stock price.

And ahead of the call on Monday, the company came out with another release saying that it believed it complied with the law where its relationship with Philidor was concerned.

It added that the fourth quarter was off to a “great start.”

“We are not anticipating any impact, but it is hard to predict how recent events will impact the business in the short term,” the company said.

From the high of $262.50 per share reached in August 2015, the stock has plunged 62% and was trading around $107 early Monday.

Screenshot 2015-10-26 10.31.32

Bill Ackman was far from the only hedge fund that got burned by Valeant. It seems that more and more large hedge funds are traveling in packs.

Bill Ackman, the famously outspoken hedge fund manager, has lost roughly $2 billion, on paper, on his investment in Valeant, the controversial drug company that plunged this past week after a short seller compared it to Enron. It was Ackman’s fund’s largest holding.

But he is certainly not alone among the losers. A number of large hedge funds were also significant holders of Valeant as recently as the middle of the year. Among the others who could be out big bucks are the funds of John Paulson, who made billions betting against the housing market, and activist investor Jeff Ubben, whose ValueAct fund had been selling shares of Valeant this year but still owned nearly 15 million shares of the company as of the middle of 2015. Both Lone Pine Capital and Viking Global, two of the world’s largest hedge funds.

(Visited 78 times, 1 visits today)