* Drugmaker says it will buy back $1.5 bln shares, debt
* Q3 EPS $0.13 vs year-earlier loss of $1.27 a share
* Q3 revenue $600.6 mln vs $208.3 mln year earlier
* Shares rise as much as 17 pct in Toronto (Adds bullets, share buy back, market reaction) (Figures in U.S. dollars)
Nov 3 (Reuters) - Shares of Valeant Pharmaceuticals (VRX.TO) rose as much as 17 percent on Thursday after it said it would buy back up to $1.5 billion of its stock or debt, and that it returned to profit on a surge in revenue.
The Canadian specialty drugmaker said its initial purchase under the buyback program would involve about 5 percent of its issued and outstanding common shares.
The company, formed a year ago after Biovail bought U.S.-based Valeant and assumed the Valeant name, reported a third-quarter profit after a loss a year earlier, when restructuring charges and other costs hurt the drugmaker's results.
The performance of its U.S. Dermatology division exceeded the company's expectations, and both of its branded generic divisions outperformed their respective markets, said Chief Executive Officer J. Michael Pearson in a release.
Net income in the quarter ended Sept. 30 came in at $40.9 million or 13 cents a share. That compared with a year-earlier loss of $207.9 million or $1.27 a share.
Revenue nearly tripled to $600.6 million from $208.3 million a year earlier, largely reflecting the combination of the two businesses.
The company narrowed its 2011 cash earnings forecast to 2.80 to $2.95 a share, from a prior range of $2.70 to $3.00 a share.
Valeant said the prior forecast included a potential $45 million milestone payment from GlaxoSmithKline (GSK.L) in the fourth quarter for the U.S. launch of epilepsy drug Potiga. The launch and subsequent milestone payment is now expected to occur in the first quarter of 2012, Valeant said.
Shares were 10.5 percent higher at C$43.03 in early trading on Thursday on the Toronto Stock Exchange. (Reporting by Euan Rocha and Allison Martell in Toronto)