February 26, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – After battling a bout of pneumonia that caused a stay in the hospital, Valeant Pharmaceuticals ’ chief executive officer Michael Pearson may have another battle to face—returning to work.
This morning Reuters reported there has been debate among board members over whether or not Pearson should return to work. There was no explanation if the question of Pearson’s return to helm the company should be delayed until he is fully recovered from his illness, or whether or not he should return at all.
Pearson, who has helmed Valeant since 2010, was hospitalized in December and the company swiftly moved to tap Howard Schiller, the company’s former chief financial officer, to step in on a temporary basis as interim CEO. Pearson’s illness and the tapping of Schiller comes at a tough time for Valeant as it seeks to calm investors after an accounting scandal and regain some market share after a difficult few months that saw the stock lose far more than 75 percent of its value. Valeant’s stock is trading at $84.69 per share this morning, but in August it was trading at $262.52 per share.
Before Pearson was hospitalized, the company faced intense scrutiny over its aggressive mergers and acquisitions tactics that included the acquiring of drugs and increasing the price. The company was also under scrutiny for its relationship with the specialty pharmacy company Philidor Rx Services that has drawn allegations of falsely inflating revenues, earning the company the moniker of the “pharmaceutical Enron,” by short-selling group Citron Inc. In an October release, Citron Research decried Valeant for its “unsavory business practices of massive price raises on pharmaceuticals acquired in a rapid succession of acquisitions, while slashing research and development.”
But even after tapping Schiller, Valeant has continued to face trouble. Most recently the company saw a loss of $6 billion in market value due to the planned restatement of earnings following an internal review. In a statement issued Feb. 22, Valeant said an ad hoc committee delving into the company’s involvement with Philidor that provided a number of the company’s prescription medications. According to the statement, Valeant said it believes approximately $58 million of net revenues reported in the second half of 2014 “should not have been recognized upon delivery of product to Philidor.”
Correcting the misstatements is “expected to reduce reported 2014 GAAP EPS by approximately $0.10 and increase 2015 GAAP EPS by approximately $0.09,” Valeant said. As a result of the restatement, Valeant said it was expecting a delay in the filing of those financial reports. Valeant said it plans to host a conference call on Feb. 29 to “discuss unaudited financial results for the fourth quarter of 2015, and provide a business update.”
Schiller appeared before a U.S. Congressional committee to answer questions about the company’s pricing practices, particularly surrounding a price increase of two recently-acquired cardiac drugs, Nitropress and Isuprel, after the company acquired Salix Pharmaceuticals, Ltd. Valeant then increased the prices for those drugs by 212 percent and 525 percent, respectively. The committee released Valeant’s emails and memos that showed Valeant anticipated that both drugs would eventually face competition from generic manufacturers, but wanted to ensure the company could benefit from its “temporary monopoly” by “increasing prices dramatically to extremely high levels very quickly.”
