|
 The news failed to stem Valeant's sliding share price, which lost
another 12 percent on Friday even after Bill Ackman, whose hedge
fund owns a 6.3 percent stake in Valeant, told investors the shares
were "tremendously undervalued."
Valeant said it would bolster its internal investigation into the
matter by adding to the team an outside lawyer who once worked in
the U.S. Department of Justice.
The drugmaker's move comes amid growing pressure from investors
after Valeant disclosed two weeks ago that it was under
investigation by the U.S. government over its patients' assistance
program and drug pricing and distribution.
Influential short-seller Citron Research was one of the first
critics to call the company out on Philidor in an Oct. 20 report,
saying Valeant was using the pharmacy set-up to inflate revenue.
Valeant has denied any wrongdoing.
Citron tweeted Friday that Valeant shares have a better chance of
going to zero than Herbalife Ltd <HLF.N>.
Citron said: "$VRX has a better chance of going to 0 than $HLF EVER
will. Citron to update full story on Monday. Dirtier than anyone has
reported!!"
Valeant disclosed this week that it had paid $100 million for an
option to buy Philidor. Bloomberg on Thursday detailed wrongdoing in
its processing of medical claims, building on earlier reports about
business practices.
Later Thursday, three top U.S. drug benefit managers, who administer
prescription medicine benefits for health plans, said they would no
longer work with the pharmacy. Express Scripts <ESRX.O>, CVS Health
<CVS.N> and OptumRx, part of UnitedHealth Group Inc <UNH.N>, said
they made the decision after conducting audits of the pharmacy.
Philidor will be shutting down operations as soon as possible,
Valeant said.
Bill Ackman, whose Pershing Square Capital Management has a 6.3
percent stake in Valeant, told investors on Friday that "life will
go on" for the company as it continues to sell high-demand products
like Bausch & Lomb contact lenses.
"We think the Valeant business is quite robust," Ackman said on a
widely attended conference call. He said shares are undervalued.
The hedge fund swept up 2.1 million additional Valeant shares last
week as the stock plummeted, making Pershing Square the company's
second-largest shareholder, leapfrogging asset manager T. Rowe
Price.
Valeant shares fell 12.4 percent Friday to $97.61, their lowest in
about two years and well below their Aug. 5 high of $263.70. They
have given up almost half their value since the company disclosed
the Philidor pharmacy distributed drugs making up 6-percent of
Valeant revenue this year.
[to top of second column] |
Bloomberg reported on Thursday that Philidor has altered doctors’
orders to wring more payment out of insurers, according to former
employees and an internal document, which details how to proceed
with a prescription for certain Valeant drugs after they have been
rejected.
'LOST CONFIDENCE IN PHILIDOR'
Valeant first disclosed less than two weeks ago that it was using a
pharmacy called Philidor, which works with a network of pharmacies
including one called R&O Pharmacy that is also involved in lawsuits
with Valeant over nonpayment and other issues.
"We have lost confidence in Philidor's ability to continue to
operate in a manner that is acceptable to Valeant," Valeant Chief
Executive Michael Pearson said in a statement. "Operating honestly
and ethically is our first priority, and you have my absolute
commitment that we will make it right."
Valeant said that former U.S. Deputy Attorney General Mark Filip had
been appointed to advise a committee that it formed earlier this
week to look into the allegations related to the company's
association with Philidor. Filip works for Kirkland & Ellis.
Philidor accounted for 6.8 percent of Valeant’s total revenue in the
third quarter and 5.9 percent so far this year. The drugmaker said
it intended to develop a plan to ensure minimal disruption to
patients' access to drugs.
Valeant shares have lost more than half their value since September
as the company has come under attack on several fronts. U.S.
prosecutors are also investigating the company over drug pricing, a
hot issue in the U.S. presidential campaign.
Valeant was until recently one of the most popular healthcare stocks
among investors, with its model of rapid acquisition-driven growth.
Its abrupt slide from market darling to a company under fire has
weighed heavily on ValueAct Partners and Pershing Square, two well
known U.S. activist funds.
(Additional reporting by Ben Hirschler in London and Shivam
Srivastava in Bengaluru; Editing by David Goodman and Nick
Zieminski)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
