The guy who crushed Valeant just slammed another pharma stock

Shares of specialty pharma company Mallinckrodt tanked after Citron Research, a short-selling firm led by Andrew Left, Tweeted that it has “more downside than Valeant.”

Mallinckrodt’s share price fell more than 22%. 

 

Valeant’s stock has collapsed more than 45% since Citron issued a report on October 21 suggesting the company was running an Enron-like fraud. The Canadian drug company had been scrutinised for drug-price increases, which has become a hot-button issue in Washington.

The Citron report focused on the company’s mysterious relationship with Philidor, a specialty pharmacy that distributes prescription drugs for Valeant. Valeant is the only supplier to Philidor, and it also has an option to buy the company. No one on Wall Street had really heard of Philidor until last month.

Citron has accused Valeant of using Philidor to create “phantom sales” of its products.

Valeant has denied the allegations in the original Citron report.

About a week later, Valeant also said that it would sever its ties with Philidor, noting that Philidor accounted for only about 7% of its revenues.

Citron has not discussed its trading in Valeant. Citron said it has a price target of $US50.

Here’s  a chart: 

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