April 7, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Valeant Pharmaceuticals could soon name a new chief executive officer, said Bill Ackman, one of the company’s biggest investors and a new member of the Valeant board of directors, Bloomberg reported Wednesday afternoon.
Ackman said the board is considering a number of candidates to replace Michael Pearson at the helm of the company. Ackman said the quality of candidates the board is interviewing means Valeant Pharmaceuticals could have a new CEO in a matter of weeks, as opposed to months. Valeant said a new CEO will restore value to the company, as well as investor confidence.
While the hunt for leadership is under way, Valeant Pharmaceuticals received some additional positive news on April 5 following an announcement of an ad hoc committee investigating the company’s ties with specialty pharmacy Philidor Rx and found no additional concerns that would require any further actions.
Valeant’s stock responded positively to the news Wednesday, jumping from $29.86 per share to $33.84 per share—a pleasant increase for the company which has seen shares lose more than 90 percent of their value since the late summer of 2015. Share value continued its rise this morning, hitting an early high of $38.06 per share. In August, Valeant stock was trading as high as $263.70, but accounting concerns over its specialty pharmacy company Philidor Rx Services and other issues have negatively impacted the company.
Ackman told Bloomberg the company’s biggest priority is finalizing its delayed 10-K report. Valeant said a delay in filing its annual report might mean the company would be in peril of defaulting on $30 billion in debt. That delay was prompted after Valeant reported in February that 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, which is part of the reason the company was forced to delay filing its financial reports. Valeant laid the blame on Howard Schiller, the company’s former chief financial officer, who briefly served as interim-CEO while Pearson battled pneumonia. The company said the “improper conduct” of Schiller resulted in the provision of incorrect information to the company and “contributed to the misstatement of results.”
Ackman, who is the director of Pershing Capital Management LP, has followed through on his promise to take a more active role in the management of Valeant. Pershing has a 9 percent stake in Valeant, making it one of the largest shareholders. Pershing lost about 25 percent of its worth primarily due to its investments in Valeant, Bloomberg reported, which is the primary reason Ackman has taken a firmer hand on the company reins. Ackman has also threatened to replace Valeant leadership if they do not turn the company around. Ackman told Bloomberg he believes Pershing will recover its losses with a turnaround of Valeant.
In March, Valeant’s board of directors initiated a search for a new CEO to replace the embattled Pearson at the helm of the company. Pearson had only recently returned to his role as CEO following hospitalization for pneumonia. At the time, Robert Ingram, chairman of the board of directors, said he believes the company “will be able to rebuild its reputation and thrive under new leadership.” Pearson will continue to serve as CEO until his replacement has been found, Valeant said in its announcement.
