‘Too much risk,’ analyst says as Valeant drops once again

Valeant Pharmaceuticals International Inc. slumped as much as 15 per cent Monday, the biggest drop since November, as a sell-off extended to a second day after a Wells Fargo analyst added to his negative report about the company.

The embattled specialty pharmaceuticals company fell 12 per cent to US$ 75.22 at 2: 51 p. m. in New York, after dropping 9.7 per cent Friday, following the report by Wells Fargo analyst David Maris, who initiated coverage with an underperform rating.

In a new note Monday, Maris gave two additional valuation models that gave the stock a value as low as US$ 62, or 27- per- cent less than Friday’s closing price. He kept his price target range at US$65 to US$68.

“Valeant shares currently carry too much risk for us to be comfortable recommending them,” Maris wrote.

The shares have plummeted since their US$262.52 August peak on concerns about the drugmaker’s now-severed ties to the mail-order specialty pharmacy Philidor Rx Services, high levels of debt used to make acquisitions and, most recently, the status of chief executive Mike Pearson, who has been on medical leave since late December. Earlier this month his interim replacement and a former chief financial offer at Valeant, Howard Schiller, faced pressure at a Congressional hearing about soaring drug prices.

Also Monday, CVS Health Corp. said it plans to restrict the use of Jublia, a toenail fungus drug from Valeant, as part of a new initiative aimed at cutting spending on dermatology treatments.

In April, the drug bene- fit manager will start a new program that limits the use of Jublia, chief medical officer Troyen Brennan said in an interview on Monday. Jublia retails at about US$ 1,000 for an eight-millilitre bottle, according to the website GoodRx, and patients in CVS’s program will have to try and fail to have their condition cured by other, less- expensive toenail fungus drugs. It’s part of a larger effort at CVS aimed at reducing the use of costly dermatology drugs, Brennan said. The program will be optional for CVS’s health insurance and employer clients.

Adding to investor concerns is uncertainty about when Laval, Que.- based Valeant will r eport its fourth-quarter earnings. The company hasn’t set a date yet for the release.

“Valeant was expected to report today and there is no word from IR or management on when they will,” Elizabeth Krutoholow, an analyst with Bloomberg Intelligence, wrote in an email Monday, referring to investor relations. That is creating some concern, she said.

Valeant is dropping amid a generally upbeat market, with the Nasdaq Biotechnology Index up 0.5 per cent.

The drugmaker closed Monday down 10.67 per cent at US$ 75.92 in New York, and down 10.97 per cent at $104.16 in Toronto.