(Corrects paragraph 3 to say Valeant had purchased an option to buy Philidor, not that it owned a stake in Philidor, changes reference to “acquisition” in paragraph 5 to “previously undisclosed relationship”)
Oct 21 (Reuters) - Shares of Valeant Pharmaceuticals International Inc plunged 30 percent after a short-seller released a report accusing the company of fraud.
Valeant has been under fire for its drug pricing practices, and last week disclosed that its pricing practices and patient assistance programs were under investigation by federal prosecutors in New York and Massachusetts.
On Monday during a conference call with investors, Valeant defended its pricing and declined to comment on the Federal investigations, saying it was cooperating. But the company disclosed new information about its dealing with two specialty pharmacies, which distribute specialty drugs to patients, including that it had purchased an option to acquire a pharmacy called Philidor and was already consolidating its results.
A New York Times story ran on the topic the next day.
A report by Citron Research, a short-selling firm run by Andrew Left, said that the company’s previously undisclosed relationship with specialty pharmacies is a sign of a cover-up and accused the company of fraud.
Valeant spokeswoman Laurie Little was not immediately available for comment.
The Citron Research report, titled “Valeant: Could this be the Pharmaceutical Enron?” hit shares hard shortly after 10 a.m. EDT (1400 GMT). After reopening, the stock was down 21 percent to $115.50 on heavy volume in New York trading.
As word of the Citron report spread through the market, selling took off. More than 22 million shares have traded so far on Wednesday, putting it on pace for its busiest day of trading in history. (Reporting by Caroline Humer and David Gaffen; Editing by Jeffrey Benkoe and Nick Zieminski)