Tag Archives: vrx

Valeant Sinks, Confirms SEC Investigation And Withdraws Guidance

Embattled specialty drug maker Valeant Pharmaceuticals ( VRX ) on Monday confirmed investigations by the SEC and others, and late Sunday withdrew its financial guidance and said it would reschedule its Q4 earnings release, as CEO J. Michael Pearson returns after a long illness. Valeant stock plunged 18% Monday to 65.80 and hit a three-year low of 63.75. Valeant had planned to report its quarterly results Monday morning, though they would have been unaudited due to an ongoing review of the company’s finances following a scandal last fall that called into question Valeant’s accounting and its relationship with now-closed specialty pharmacy Philidor. In response to media inquiries, a Valeant spokeswoman confirmed that the company has several ongoing investigations, including investigations by the U.S. Attorney’s Offices for Massachusetts and the Southern District of New York, the SEC and Congress. The company confirmed it received a subpoena from the SEC in Q4 2015 and said that, in the normal course, it would have included this disclosure in its 2015 10-K. The U.S. Justice Department also is investigating, as was known, something Valeant inherited with its $11 billion acquisition of Salix Pharmaceuticals last year. Last Monday, the committee reviewing those issues announced an interim finding that $58 million in Philidor-related revenue should not have been booked in 2014, leading to a 10-cent reduction in EPS for that year. However, since some of that revenue was supposed to be booked later, it would add 9 cents to 2015 EPS. Valeant CEO Fought Pneumonia Pearson came down with severe pneumonia at Christmastime and had to be hospitalized for so long that Valeant appointed former CFO Howard Schiller to take over his job temporarily. Pearson had also been chairman, but when he returned to work Monday the company said it would separate the two roles and appointed five-year board member Robert Ingram as chairman. Valeant affirmed its 2016 guidance in mid-January, calling for a 21% increase in sales and a 31% hike in EPS. The fact that it’s now withdrawing that guidance is a worrisome sign, say analysts. “While we had expected updated guidance, we struggle to fully understand the rationale for removing guidance altogether,” wrote Nomura analyst Shibani Malhotra in a research note. But Malhotra says Pearson’s return is a positive sign. “We believe investors still view much of Valeant’s strategy and success as driven by Pearson, and we expect that the ability to retain him as a leader will allow the company to maintain one of its more significant competitive advantages,” she wrote. “Perhaps more importantly, we believe the fact that Pearson is returning as CEO bolsters the credibility of the company and the board of directors, given that the board publicly supported Pearson and his leadership throughout the recent public scrutiny.” RBC Capital Markets analyst Douglas Miehm agreed, noting that Pearson said he would try to build stronger relationships with payers and government regulators and would improve Valeant’s accounting and transparency. “Having said this, we see the overall approach to rescheduling Q4 and withdrawing guidance after reiterating it in January as likely to carry more weight until Mr. Pearson has been able to reach out to the Street and provide some clarity,” Miehm wrote in his research note. Valeant also revealed that Actavis, the generic drug maker in the process of being acquired by Teva Pharmaceutical Industries ( TEVA ), had filed for FDA approval of a generic version of Xifaxan 550mg, a gastrointestinal drug that was the main selling point of Valeant’s Salix acquisition. “We note that Valeant currently has 22 patents covering Xifaxan 550, which are scheduled to expire between August 2019 and October 2029,” Miehm wrote. “We continue to believe a generic is unlikely for at least seven years.”

Valeant Stock Sinks As 2016 Guidance Withdrawn, CEO Returns

Embattled specialty drug maker Valeant Pharmaceuticals ( VRX ) said Monday that it was withdrawing its financial guidance and will reschedule its Q4 earnings release, as CEO J. Michael Pearson returns after a long illness. Valeant stock was down 9% in morning trading in the stock market today , near 73 and near a three-year low of 69.33 touched in November. Valeant had planned to report its quarterly results Monday morning, though they would have been unaudited due to an ongoing review of the company’s finances following a scandal last fall that called into question Valeant’s accounting and its relationship with now-closed specialty pharmacy Philidor. Last Monday, the committee reviewing those issues announced an interim finding that $58 million in Philidor-related revenue should not have been booked in 2014, leading to a 10-cent reduction in EPS for that year. However, since some of that revenue was supposed to be booked later, it would add 9 cents to 2015 EPS. Valeant CEO Fought Pneumonia Pearson came down with severe pneumonia at Christmastime and had to be hospitalized for so long that Valeant appointed former CFO Howard Schiller to take over his job temporarily. Pearson had also been chairman, but when he returned to work Monday the company said it would separate the two roles and appointed five-year board member Robert Ingram as chairman. Valeant affirmed its 2016 guidance in mid-January, calling for a 21% increase in sales and a 31% hike in EPS. The fact that it’s now withdrawing that guidance is a worrisome sign, say analysts. “While we had expected updated guidance, we struggle to fully understand the rationale for removing guidance altogether,” wrote Nomura analyst Shibani Malhotra in a research note. But Malhotra says Pearson’s return is a positive sign. “We believe investors still view much of Valeant’s strategy and success as driven by Pearson, and we expect that the ability to retain him as a leader will allow the company to maintain one of its more significant competitive advantages,” she wrote. “Perhaps more importantly, we believe the fact that Pearson is returning as CEO bolsters the credibility of the company and the board of directors, given that the board publicly supported Pearson and his leadership throughout the recent public scrutiny.” RBC Capital Markets analyst Douglas Miehm agreed, noting that Pearson said he would try to build stronger relationships with payers and government regulators and would improve Valeant’s accounting and transparency. “Having said this, we see the overall approach to rescheduling Q4 and withdrawing guidance after reiterating it in January as likely to carry more weight until Mr. Pearson has been able to reach out to the Street and provide some clarity,” Miehm wrote in his research note. Valeant also revealed that Actavis, the generic drug maker in the process of being acquired by Teva Pharmaceutical Industries ( TEVA ), had filed for FDA approval of a generic version of Xifaxan 550mg, a gastrointestinal drug that was the main selling point of Valeant’s $11 billion acquisition of Salix Pharmaceuticals last year. “We note that Valeant currently has 22 patents covering Xifaxan 550, which are scheduled to expire between August 2019 and October 2029,” Miehm wrote. “We continue to believe a generic is unlikely for at least seven years.”

Valeant Slammed, Shkreli Calls Congress ‘Imbeciles’ in Tweet

Members of Congress strongly criticized Valeant Pharmaceuticals International ( VRX ) and Turing Pharmaceuticals, accusing the companies of dramatically increasing the price of drugs. The hearing in Washington was heated and at times a puzzling spectacle, with controversial pharma executive Martin Shkreli smirking throughout but refusing to testify after invoking the Fifth Amendment, his lawyer being asked at one point to stay seated, and Shkreli later taking to Twitter to insult lawmakers. With Shkreli declining to comment at the hearing itself, lawmakers used the opportunity to lambaste Turing, Shkreli’s former company, and Valeant about their drug price increases. “They bought them, jacked up the prices, took as much money as they could out of the pockets of patients, hospitals, and others, and then put those funds into their own coffers,” said Representative Elijah Cummings of Maryland, the top Democrat on the House Committee on Oversight and Government Reform. At one point, Shkreli cracked a smile midway through Cummings’s remarks about how the company’s price increases hurt patients. “It’s not funny, Mr. Shkreli, people are dying,” Cummings said at the packed hearing room in Washington. Shkreli is facing federal fraud charges unrelated to Turing. He has maintained his innocence. Turing and Valeant have become the poster companies for an industry that has been increasingly in the spotlight in Washington for raising some prices so high that they’re out of reach for many patients and straining state and federal budgets. Shkreli was excused after his testimony. Brafman, speaking outside the hearing room, said that Shkreli would have liked to talk. “This was a frustrating morning for us,” Brafman said, “frustrating because many of the things said in this hearing were just not accurate.” He said that some of Shkreli’s demeanor at the hearing was “nervous energy,” and that it was unfair that Turing had been singled out. The “priority is to resolve the criminal case,” Brafman said. “I think at the end of this story he is a hero.” In fact, Shkreli did comment on Twitter, minutes after leaving the hearing. “Hard to accept that these imbeciles represent the people in our government,” he said. Different Than Turing Valeant interim CEO Howard Schiller, in prepared testimony released yesterday, explained why the company decided to increase the prices of two cardiac drugs by 525% and 212%, and promised to end an era of sharp hikes. Valeant’s CEO Mike Pearson is out on medical leave. “While, like most other pharmaceutical companies, we will from time to time raise prices, I expect those price increases to be within industry norms and much more modest than the ones that drew this Committee’s legitimate concern,” Schiller said in his prepared remarks. “Where we’re made mistakes, we’re listening and we’re changing,” he told the committee at the hearing. Schiller was asked how his company was different than Turing. Schiller began to answer, “Valeant is a global company” mentioning the number of offices they have before Representative Carolyn Maloney, a New York Democrat, cut him off, saying they were asking about the company’s strategy, not its scale. “The only strategy I saw was, ‘Let’s increase the price of the drugs,”’ Maloney said. Chaffetz blamed the Food and Drug Administration for not working fast enough to approve generic drugs, saying the agency was “drowning in a backlog” of applications. “I believe that the FDA has failed to meet its statutory responsibilities,” Chaffetz said. “If somebody increases the price of a prescription drug that’s going to invite more competition but if that competition can’t get approval from the FDA there will be no competition.” Janet Woodcock, an FDA official, said the agency was working quickly through the list of applications and that the backlog wasn’t as bad as Chaffetz made it seem. “The generic backlog was a big problem,” she said. “This was ultimately fixed” but takes time to implement.