Valeant completes Philidor probe without additional fallout
Embattled drugmaker Valeant Pharmaceuticals International (VRX) reported Tuesday that a special board committee had completed an internal investigation without discovering additional financial fallout from the firm's previous ties to a controversial pharmacy company.
The announcement sent Valeant shares up 10.0% to $28.73 Tuesday as the drugmaker also said it plans to meet a key April 29 filing deadline required to avoid potential default on debt obligations.
Before Tuesday, Valeant shares had lost roughly 90% of their value in in a seven-month slump as the Canada-based company struggled with investigations and questions about its price hikes for prescription drug price increases.
The drugmaker has also been criticized about its since-severed relationship with specialty mail-order pharmacy Philidor Rx Services, which distributed Valeant medications to patients.
An October report by prominent short-seller Andrew Left's Citron Research accused Valeant of creating a "network of phantom captive pharmacies" to boost sales of its more expensive drugs. The company denied the allegations, but ordered the board investigation that eventually resulted in plans to restate $58 million in financial earnings from late 2014 into 2015.
Valeant board chairman Robert Ingram, who also chaired the ad hoc committee, said the special panel "believes that its review of various Philidor and related accounting matters is complete, and that it has not identified any additional items that would require restatements beyond those required by matters previously disclosed."
Concurrently, Ingram said Valeant expects to file its annual report on or before April 29, in compliance with a deadline written into the drugmaker's financing agreements. The annual report had been delayed pending the results of the board investigation.
Still, Valeant remains under scrutiny from federal officials. Soon-to-depart CEO J. Michael Pearson was recently subpoenaed to testify during an April 27 hearing of a Senate committee that is examining drug price increases.
Additionally, the company's pricing and distribution practices are the subject of investigations by federal prosecutors in Massachusetts and New York as well as the Securities and Exchange Commission.
Valeant has also faced internal discord. In March, the company said former chief financial officer Howard Schiller had engaged in "improper conduct" that "contributed" to the company's misstatement of financial results.
"At no time did I engage in any improper conduct that relates to any restatement of revenue the company is considering," Schiller responded in a statement issued by his attorney.
Schiller, who took on Valeant's top job on an interim basis when Pearson was ill with pneumonia, also declined Valeant's request that he step down from the company's board.
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