Valeant rebounds ahead of Monday call to address allegations
By Rod Nickel
Oct 23 (Reuters) - Valeant Pharmaceuticals Inc shares rebounded on Friday from four days of steep losses over allegations it used specialty pharmacies to inflate revenue, which the company plans to refute in detail on Monday.
Laval, Quebec-based Valeant on Thursday moved to reassure investors, saying it would address the allegations in detail on a conference call. The stock began to recover after that announcement, although it still closed lower on Thursday.
On Friday, shares climbed about 9 percent in Toronto and New York to C$157.07 and $119.50 respectively. They had lost 25 percent in the previous two trading days.
"I'm hoping the modest bounce today is the market collecting themselves again and trying to inject some rationality into this whole thing," said Annabel Samimy, analyst at Stifel Nicolaus & Company.
Concerns about Valeant are overblown and based on a misunderstanding of how the U.S. drug supply chain works, she said.
BMO analyst Alex Arfaei said in a note on Thursday, however, that "Valeant's structure may not be illegal, but we find it aggressive and questionable."
A law firm announced a lawsuit against Valeant and seeks class action status on behalf of buyers of the company's stock between Feb. 23 to Oct. 20 after influential short-seller Citron Research alleged the Canadian drugmaker used specialty pharmacies to create "phantom sales."
Citron's allegations have heaped pressure on Valeant, which is already under scrutiny for major price hikes on drugs that it has acquired over the years, including investigations launched by federal prosecutors in New York and Massachusetts.
Valeant has built a reputation for rapidly acquiring drugmakers and scaling up sales of their medicines, in some cases through steep price increases. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Nick Zieminski)
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