UPDATE 5-Drugmaker Valeant raises detailed defense but doubts remain

Mon Oct 26, 2015 3:40pm EDT
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(Adds Philidor comment, analyst and investor comment, links to Breaking Views and graphics, updates shares)

By Caroline Humer and Euan Rocha

Oct 26 (Reuters) - Drugmaker Valeant Pharmaceuticals International Inc laid out a detailed defense on Monday of its relationship with a little-known specialty pharmacy, but its arguments failed to calm all investor concerns.

Valeant shares have lost more than half their value in recent weeks as the company came under attack on several fronts.

U.S. prosecutors are investigating Valeant over drug pricing, an issue emerging in the U.S. presidential campaign. The falling stock price, in turn, complicates Valeant's acquisition-driven strategy. And those stock losses accelerated last week when short-seller Citron Research, run by Andrew Left, published a sharply critical report on the company.

The stock dropped another 2 percent in volatile afternoon trading in New York and Toronto.

Laval, Quebec-based Valeant said it has asked U.S. securities regulators to investigate Citron's "completely untrue" allegation that the company used its ties with a specialty pharmacy to inflate revenue, and said it would conduct a review of its pharmacy network.

About a dozen executives, directors, and a former chief financial officer - some of whom Chief Executive Mike Pearson said were operating on little sleep - made up Valeant's defense team on a conference call with investors and analysts. The call included an unequivocal endorsement of Pearson by lead director Robert Ingram.

"(Left's) motivation is the same as one who runs into a crowded theater and falsely yells fire. He wanted people to run," Pearson said. "He intentionally designed the report to frighten our shareholders to drive down the price of our stock so he could make money for his short-selling."   Continued...