Shares in Valeant fall after Pershing Square sells off all stock

MONTREAL (CP) — Shares of Valeant Pharmaceuticals hit a seven-year low on Tuesday after one of its largest investors sold off all remaining stock in the Laval, Que.based drugmaker, the latest knock to what was once one of Canada’s most valuable companies.

Valeant shares hit $14.15 in early trading on the Toronto Stock Exchange. That was down nearly 13 per cent from Monday’s close and the lowest the stock has been since January 2009. It closed at C$14.59, down $1.62 or 10 per cent.

Pershing Square Capital Management announced on Monday that it had sold its final stake in Valeant for a large tax loss. At one time, the New York-based firm headed by CEO Bill Ackman had been the largest single shareholder in Valeant and one of its most vocal defenders. Ackman had once viewed Valeant as an undervalued company that would eventually overcome its problems, which included a scandal over its drug pricing strategy. Last April, Ackman testified before a U.S. Senate committee about Valeant’s much-maligned strategy of buying niche drugs and raising their prices by as much as 3,000 per cent.

Gary Nachman of BMO Capital Markets and Neil Maruoka of Canaccord Genuity slashed their outlooks for Valeant’s shares by more than 20 per cent on Pershing’s move.

“Considering all of Pershing’s efforts to create a turnaround situation with the new management team, we believe this ‘throwing in the towel’ at these levels sends a poor signal regarding the road ahead for Valeant,” Nachman wrote in a report.