March 18, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Valeant Chief Executive Officer J. Michael Pearson is in full damage control as he seeks to assure investors and employees that the company is not going broke—especially after company stock dropped more than 50 percent this week to a new low of $29.55 per share.
Shares plunged Tuesday after Valeant said a delay in filing its annual report might mean the company would be in peril of defaulting on $30 billion in debt, Reuters reported. If the company does not file its annual 10-K report with the U.S. Securities and Exchange Commission by its deadline, the company could default on some of its debt. Pearson said the company was aware of the deadline and was working to extend its loan deadlines, Bloomberg reported.
On Tuesday, the company also said it was readjusting its 2016 forecast to assume lower growth in several key market areas, including its dermatology, gastrointestinal and woman’s health portfolios in the United States and Western Europe due to concerns over new managed care contracts. Pearson also noted a concern over a “pricing environment” that will impact 2016 forecasts. During a two hour conference call with investors and analysts on Tuesday, Reuters noted that Pearson was pressed with questions about his leadership abilities and the confidence investors may have lost in Valeant management overall. While Pearson was questioned, Reuters said Bill Ackman, one of the largest investors in Valeant and a recent appointee to the company’s board of directors, said he was going to take a more active role in company leadership. Ackman has also threatened to replace Valeant leadership if they do not turn the company around.
Valeant has been embattled by for months. What once was seen as a strong performer in the market due to its aggressive mergers and acquisitions, may now seem like only a shell of itself to investors. 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.
That negative view has apparently been picked up by Valeant employees who expressed concern over whether or not the company was in danger of going bankrupt. The issue was so concerning that Pearson sent an email to Valeant employees assuring them the company was still sound, Bloomberg reported.
Valeant does have some plans to right its floundering ship, including the sale of some of its assets, Reuters noted. What those assets will be were not stated. But, paying down that debt will not include selling off its Bausch & Lomb unit, something Ackman has pressed the company to do.
“Our business is not operating on all cylinders, but we are committed to getting it back on track,” Pearson said, according to Reuters.
While the sale of some non-core assets may be in the works, Pearson touted its December deal with Walgreens to sell of its branded products at a 50 percent discount as being off to a strong start. The company said it will sell some of its name brand products used for “dermatology, ophthalmology, gastrointestinal and neurology/other therapeutic areas” at generic prices, if there are generics of that drug. Additionally, Valeant will reduce all of its dermatological and ophthalmological products by 10 percent in Walgreens.
Despite the challenges facing Valeant, Pearson, who recently returned to helm the company after being hospitalized with pneumonia, said he is confident the company will get “back on track” this year, Bloomberg reported.
