Martin Shkreli Tweets He Has Taken a "Long Position" on Valeant Stock
October 23, 2015
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Martin Shkreli, embattled chief executive officer of Turing Pharmaceuticals, is high on the stock of equally embattled Valeant Pharmaceuticals , Business Insider reported this morning.
On his very active Twitter account, Shkreli said he has taken a “long position” on Valeant, while taking a short position on Allergan .
“Both companies have similar prospects and one is at half the price,” Shkreli tweeted.
Valeant’s has lost more than 50 percent of its value in the past few months, falling from a high of $259.98 per share to a low of $113.19 per share. Valeant’s bleeding continued this week after Citron Research, a short-selling firm, called Valeant the “pharmaceutical Enron.” In a release, Citron 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.” Additionally, the Citron report criticized Valeant’s relationship with Pennsylvania-based Philidor Rx Services, a specialty pharmacy acquired by Valeant last year. Philidor engages in the “prescriptions made easy” practice. Under this practice, a pharmaceutical company encourages physicians to submit prescriptions for the high-priced medication to a mail-order pharmaceutical company associated with the parent pharmaceutical company. That pharmacy sends the medication to the patient and then directly deals with the insurance company.
Additionally, Citron highlighted a Wall Street Journal report of another specialty pharmacy, R&O Pharmacy, which “claims it had received an improper demand for payment from Valeant to the tune of $69 million.” In its report, Citron said R&O is owned by Philidor and accused Valeant of creating phantom invoices to “deceive auditors and book revenue.”
Valeant fired back, calling the report erroneous. The company claimed in a statement on its website that Philidor is a legitimate distribution network for Valeant and any sales are “accounted for as intercompany sales and are eliminated in consolidation.”
Shkreli defended Valeant. In another Tweet, he called Citron’s report “embarrassing, inaccurate innuendo.”
Valeant is facing scrutiny from U.S. lawmakers and two U.S. attorney’s offices over pricing of drugs acquired through acquisitions. Valeant is under fire for 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. Valeant acquired the two drugs in April.
In addition to the two cardiac drugs, Valeant has also been criticized for quadrupling the price of the 55-year-old drug Cuprimine, used in the treatment of Wilson disease. A New York Times article excoriated Valeant for its practice of increasing the price of drugs following an acquisition. According to a Deutsche Bank report, Valeant increased prices on its brand-name drugs an average of 66 percent, about five times more than its other competitors, the Times said. Valeant, the article says, spends only about three percent of sales generated revenue on research and development, “which it views as risky and inefficient compared with buying existing drugs.” That amount was about $246 million in 2014.
That criticism is likely one reason that on Monday Valeant said it intends to implement an increase on research and development spending. Valeant said it plans on budgeting $400 to $500 million on R&D next year. It is also leading the company to mull over spinning off its neurology business and additional drug businesses that are more dependent on price increases.
Shkreli, of course, if facing his own criticisms for increasing the price of a newly acquired drug by 5,000 percent. After being all but hanged in effigy on social media, Shkreli, a former hedge fund manager, said he would lower the cost of Daraprim, but has made no move to do so.