Valeant CEO To Return After Illness

Valeant Pharmaceuticals International Inc. said it is under investigation by the U.S. Securities and Exchange Commission in a previously undisclosed probe.

Valeant Pharmaceuticals is entangled in an SEC investigation to compound the drugmaker’s headaches as it grapples with questions about its pricing practices, finances and CEO’s health.

The SEC is investigating Valeant Pharmaceuticals. Earlier in the week, the company had announced it would restate earnings on findings from an internal investigation launched amid scandal past year.

Valeant declined further comment.

Valeant is also one of the companies under investigation as the U.S. Congress looks at price increases for certain specialty drugs.

In a report issued on February 25, Shibani Malhotra from Nomura Holdings maintained a Buy rating on Valeant Pharma (NYSE: VRX), with a price target of $175.

Valeant announced last night that effective immediately, Mike Pearson will return as CEO.

In Sunday’s announcement of Pearson’s return, Chairman of the Board Robert Ingram noted Valeant would work to expand the senior team around Pearson.

On Friday, shares closed at $80.65 in NY trading. “In our view, if the board decides to remove Pearson from the CEO position, Valeant would ideally need to replace him with an outsider with extensive pharmaceutical experience or consider the more drastic approach of entertaining an offer for all or parts of the company”.

The Company expects to provide preliminary financial information for the fourth quarter of 2015, and 2016 guidance, in the near term.

Through all the drama, Valeant had disclose its secret relationship with a special distributor, Philidor pharmacy, that it had the option to purchase.

Pearson, who was hospitalized in late December with severe pneumonia, went on sick leave as he was attempting to regain investors’ trust after the company came under fire for its price increases and a relationship with Philidor. The Canadian company cut ties with Philidor last fall amid allegations that Philidor helped steer pharmacy benefit managers toward Valeant’s more expensive drugs over cheaper alternatives.

The company said it received a subpoena from the SEC in the fourth quarter of a year ago.

But Pearson’s CEO’s illness “serves as a reminder of the importance of succession planning”, he added. CIBC began coverage on Valeant Pharmaceuticals Intl in a report on Monday, November 30th. Janus Capital Management now owns 3,258,686 shares of the specialty pharmaceutical company’s stock worth $581,295,000 after buying an additional 863,566 shares during the last quarter.

Arfaei, the BMO analyst, said he’s not too concerned because Valeant is confident that much of its patents for the drug expire between 2019 and 2029.