Laval, Quebec – Valeant Pharmaceuticals announced Monday that it is under investigation by the U.S. Securities and Exchange Commission in a previously undisclosed probe, sending company stock to a reported three-year low.
The Canada-based drug maker confirmed it received a subpoena from the commission in the fourth quarter of 2015 and, “in the normal course, would have included this disclosure in its 2015 10-K.” Audited full-year results have been delayed.
Valeant also confirmed that it has several ongoing investigations, including investigations by the U.S. Attorney’s Offices for Massachusetts and the Southern District of New York, the SEC, and Congress.
On the news, the company’s shares on the New York Stock Exchange plummeted more than 18 percent, closing Monday at $65.80 per share. By mid-morning today, shares fell further trading at $62.82. On the Toronto Stock Exchange, shares were off about 14 percent on Monday.
Valeant has been under scrutiny for months over allegations of drug price gouging and a previous relationship it had with Philidor RX Services, a Hatboro, PA-based specialty pharmacy, amid accusations of inflated revenues. It severed the Philidor relationship in October and denied price-gouging accusations.
“We have lost confidence in Philidor’s ability to continue to operate in a manner that is acceptable to Valeant and the patients and doctors we serve,” J. Michael Pearson, Valeant Chairman and CEO, said at the time.
Philidor has since issued notices under the Worker Adjustment and Retraining Notification Act, which requires employers to provide 60-day notice ahead of plant closings and mass layoffs.
Valiant delayed release of its fourth-quarter financial results originally scheduled for Monday citing Pearson’s recent medical leave. Complications from pneumonia had kept him off the job since mid-December. He returned over the weekend issuing a statement saying he intends to rebuild relationships with business partners, regulators and government representatives.
“I realize that recent events are disappointing to everyone and it is my responsibility to set the appropriate tone for the organization,” Pearson said in the statement. “I will focus on the retention and enhancement of our management teams and employee groups around the world and ensure that we maintain a culture that adheres to the highest ethical standards.”
The company announced last week that its audited results for 2015 would be delayed because it had to restate its financial reports for 2014 and 2015 due to errors in the way it recorded revenue from sales through Philidor.
(Sources: The Canadian Press and The Associated Press)