March 4, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Responding to investors’ concerns that in part caused a slide in stock prices, Valeant Pharmaceuticals reiterated that Deb Jorn, one of the company’s executive vice presidents, resigned her position and was not terminated.
Valeant announced Jorn’s resignation Wednesday, only saying that her time with the company came to an immediate end. After investors raised concerns, Valeant repeated that Jorn resigned due to personal reasons.
“It is our understanding that Deb Jorn decided to leave Valeant for personal reasons. Her departure is not the result of an action taken by the Ad Hoc Committee of the Board of Directors,” Valeant said in a statement on March 3.
Jorn was responsible for running the company’s U.S. dermatology and gastrointestinal businesses, which had ties to Philidor Rx Services, the controversial specialty pharmacy that came under fire for its accounting practices as well as its aggressive moves to push Valeant’s dermatology drugs last year. When Philidor was in operation, the specialty pharmacy engaged 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. However, after Valeant’s relationship with Philidor came under scrutiny, Valeant severed ties with the company and it has since shut down operations. Philidor accounted for 6.8 percent of Valeant’s revenue during the third-quarter of 2015.
The relationship with Philidor recently caused Valeant to restate earnings following an internal review. In a statement issued Feb. 22, Valeant said an ad hoc committee delving into the company’s involvement with specialty pharmacy Philidor Rx Services 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.”
Valeant’s relationship with Philidor was one of the reasons Valeant came under scrutiny from federal regulators. That relationship has drawn allegations of falsely inflating revenues, earning the company the moniker of the “pharmaceutical Enron,” by short-selling group Citron Inc. Those critical of the “prescriptions made easy” practice say it prevents patients and insurance companies from switching to cheaper alternative prescriptions and serves to pad the bottom lines of companies such as Valeant.
In November 2015, J. Michael Pearson, Valeant’s chief executive officer, announced the company was divesting itself of Philidor and said it was likely to impact the company’s dermatological sales figures. During the November call, Pearson said dermatological sales were $465.5 million in the U.S. last quarter, out of total revenue of $2.79 billion. Of that, Philidor represented about $190 million in third-quarter sales, almost all of which were for dermatological products.
Valeant said Jorn was the “driving force” behind the launches of the anti-fungal creams Jublia and Luzu. Upon her resignation, Valeant appointed Eric Abramson, vice president dermatology & immunology marketing, to oversee Valeant’s U.S. Dermatology business. Ari Kellen, executive vice president and company group chairman, was appointed to oversee Valeant’s gastrointestinal business, the company announced March 2.
Concerns over Jorn’s resignation comes at a time when Valeant is trying to preserve its reputation with investors who have been spooked by the controversies surrounding the company over the past year, including federal investigations into the pricing of its drugs. Since Valeant has come under scrutiny, company stock has dropped more than 75 percent of its value. The stock is currently trading at $63.77 per share, but in August it was trading at $262.52 per share.
