Valeant Pharmaceuticals Shares Plunges After SEC Investigation
By Staff Writer
The Canadian drug company admitted to be under investigation by the U.S. Securities and Exchange Commission and other agencies. Afterward, the company's shares was down 18% on Monday trading.
Valeant spokeswoman Laurie Little admitted as quoted by Reuters, "Valeant confirms that it has several ongoing investigations, including investigations by the U.S. Attorney's Offices for Massachusetts and the Southern District of New York, the SEC, and Congress."
The company's share plunged 18% on Monday trading to close at $65.80 per share.
Indication of the investigation came after the Quebec-based company cancelled to release its fourth-quarter earnings and withdrawing 2016 financial guidance. Meanwhile it also announce that its CEO Michael Pearson returned from two-month absence of medical leave.
CNBC was first reported on Sunday regarding the return of Valeant's CEO Michael Pearson from medical leave, and the postpone of its fourth-quarter results planned for Monday.
The Canadian drugmaker said in a statement that it had received a subpoena from the SEC. However further details regarding the investigation is not available. Valeant stated that due to the investigation, its fourth-quarter result announcement and formal regulatory filing of 10-K is being delayed.
Market Analyst of BMO Capital Markets Alex Arfaei in his note to investors as quoted by Bloomberg wrote, "The withdrawal of prior 2016 financial guidance is clearly negative." However the return of Michael Pearson as CEO is deemed positive as, "few other executives would be as qualified, and incentivized, in turning Valeant around."
Michael Pearson is known with his serial acquisition and also played a major role in surging the company's drug price following acquistion of other companies. Last December, he was hospitalized due to severe pneumonia. The news of his comeback is expected to regain trust from investors as the company was under pressure for its price hike and series of investigation.
The controversy began in September, when Valeant increased drug price by 66% resulting a ridiculously high price of its drug in the United States. Price of its flucystosine is 10,000% higher in the U.S. than Europe. While the company also increase the price of two important drugs Nitropress and Isuprel to 212% and 525% respectively.
More than that, following acquisition of Salix Pharmaceuticals last year, Valeant surged the price of the diabetes pill Glumetza by 800%. Pearson and his business model was under heavy criticism, as the company shares sunk and investors turned away as the company's business model was under fire.
Later on, the United States House Committee on Oversight and Government Reform subpoena the company. The committee investigated companies operated in the U.S. which involved in raising drug price to skyrocket.
Now Valeant was also under the investigation by SEC with an undisclosed . The company shares dropped on Monday by 18% after the company admitted the investigation.