Valeant Pharmaceuticals has released a statement defending its CEO, Michael Pearson, CNBC reports.
The company says Pearson has the board’s full confidence “he remains focused on running the business.”
Valeant’s stock continued its steep decline on Thursday, falling to a 2-year low of $US77 at points during the trading day.
It is now down around 14%.
The company, once a Wall Street darling, has seen its stock price fall by half over the last few months as politicians attacked its low R&D spending business model and accused it of price gouging.
At the same time, Valeant was forced to answer questions about its close relationship with a shady specialty pharmacy called Philidor — a pharmacy that it had not disclosed to its investors about until last month.
On Thursday, the Wall Street Journal published a describing Valeant’s troubles from the point of view of its third largest shareholder, Bill Ackman, founder of hedge fund Pershing Square.
In the piece, Ackman says that he repeatedly called for Valeant to be more transparent.
“If Mike hides in his bunker on this, he can’t be CEO,” Ackman told the company’s lead director, Robert Ingram of Hatteras Venture Partners.
Later on Thursday CNBC’s Scott Wapner reported that Ackman e-mailed Pearson expressing his full support.
On Wednesday U.S. Senators Susan Collins (R-Maine) and Claire McCaskill (D-Missouri) announced that the launch of a bipartisan investigation into several drug companies, including Valeant.
In a statement, McCaskill directly attacked Valeant’s acquisition heavy business model.
“Some of the recent actions we’ve seen in the pharmaceutical industry — with corporate acquisitions followed by dramatic increases in the prices of pre-existing drugs — have looked like little more than price gouging,” McCaskill said.
The stock then fell 6% by the end of the trading day.
McCaskill and Collins will hold their first hearing on December 13th.
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