Then R&O was created to allow Philidor access to the California market. In response, VRX stated that the relationship it has with Philidor is legitimate and that they do not clock revenue until the end product is sold by Philidor. “This alone, negatively affects Valeant’s expected rate of growth”, he says.
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Booking sales when a patient gets the drug is pretty common for drugmakers. So basically, Valeant’s products are sent to specialty pharmacies on consignment. The brokerage now has a buy rating on the specialty pharmaceutical company’s stock. ValueAct principals also serve on Valeant’s board.
Maruoka reiterated a Buy rating on Valeant shares, with a price target of $235, which represents a potential upside of 98% from where the stock is now trading.
Recently, Valeant has been at the forefront of an intensifying debate over price increases for older drugs in the U.S. Citron Research said today that Valeant is using a specialty pharmacy called Philidor RX Services to store inventory and record those transactions as sales. In a statement Citron made the allegation that Valeant Pharmaceuticals was improperly benefiting from a relationship with a pharmacy known as Philidor, a pharmacy that has only one client… you guessed it, VRX!
In the early afternoon Wednesday, Valeant issued a press release disputing several points of Citron’s report.
Valeant said it does not record drugs stocked at such pharmacies in its consolidated financial reports.
Citron said in its report that it appears that Valeant and Philidor have created an entire network of clones to Philidor to avoid auditor scrutiny. “We are confident in our full compliance with all applicable accounting rules, regulations and laws”, it said. Hedge fund star Bill Ackman doubled down on his support for Valeant, scooping up another 2 million shares Wednesday.
The Quebec-based drug company’s stock has plunged 42% this week alone.
Valeant revealed last week that federal prosecutors have subpoenaed documents tied to its drug pricing and other policies. Shares closed at $118.61 on Wednesday. VRX’s daily range is $88.50 – $148.46 with a 52 week range of $88.50 – $263.81. Members of the company’s audit committee will be present, as well as its CFO, general counsel and director Robert Hale, who represents hedge fund and top-five shareholder ValueAct Capital.
Valeant owns an option to acquire Philidor, the company said.
About Valeant Pharmaceuticals worldwide, Inc.
Valeant Pharmaceuticals worldwide, Inc., incorporated on August 9, 2013, is a specialty pharmaceutical and medical device company.
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Valeant develops, makes and markets drugs mainly in the areas of dermatology, gastrointestinal disorder, eye health, neurology and branded generics. “This strategy is much different than the vast majority of innovative biopharmaceutical companies that invest a significant share of their revenues into developing new treatments and cures”.
