Drugmaker wants regulator to probe ‘false allegations’

MONTREAL — Embattled drugmaker Valeant Pharmaceuticals is asking U.S. securities regulators to investigate Citron Research, whose explosive report about the Quebecbased company’s business practices caused its stock to crater.

CEO Michael Pearson told analysts on a conference call Monday that the main reason for Valeant’s recent problems is that it’s the victim of false allegations by outsiders who want to manipulate the market to their own profit.

Pearson said he has called on the Securities and Exchange Commission to investigate Citron Research and Andrew Left, its executive editor, after the U.S. short-seller compared Valeant to Enron, the U.S. energy firm that collapsed after widespread deception and fraud at the highest levels of management.

“His motivation is the same as someone who runs into a crowded theatre to falsely yell, ’Fire.’ He wanted people to run,” Pearson said. “He intentionally designed the report to frighten our shareholders to drive down the price of our stock so he could make money for his short selling.”

Left said it’s Pearson who owes people an expla- nation. “Before accusing me of market manipulation, Pearson should ask himself why Philidor was undisclosed to Valeant shareholders,” Left said.

The SEC declined to comment.

Citron is a short-seller’s research firm that publishes reports online about companies. Short-sellers earn money when a stock declines. Citron says on its website it does not guarantee it is providing all available information, and its principals “most always” hold a position in securities profiled on its site.

In a report last week, Citron alleged Valeant set up a network of phantom pharmacies to fool auditors — allegations that Pearson said are “completely untrue.”

Valeant’s stock has been on a slide since the report was released, resulting in billions of dollars of losses for its shareholders. Its shares fell another $7.35 or 4.81 per cent to close at $145.34 on Monday.

Pearson said Valeant follows the law as well as accounting and disclosure rules, adding he would not hesitate to take action if he finds violations.

Valeant’s board will conduct its own review of allegations into the drugmaker’s business relationship with Philidor.