VALEANT CEO WARNS OF SHORT- TERM FALLOUT

But the ‘ company is going to survive,’ CEO tells investors

Valeant Pharmaceuticals International on Tuesday said its dermatology division faces “significant” short- term disruption after the embattled drugmaker’s split from a pharmacy partner whose business practices prompted allegations and questions.

Company CEO and Chairman J. Michael Pearson issued the warning during a conference call in which he tried to reassure investors the disruption would not prevent Valeant from weathering the financial storm that has erased nearly 70% of the firm’s stock value in a little more than three months.

“The company is going to survive,” Pearson said during the call, Valeant’s second of the crisis. “The cash flows are strong, and the momentum is good.”

Valeant shares nonetheless continued to plunge, closing down 2% at $ 83.68.

Pearson and other executives declined to discuss details about Valeant’s now- severed ties with Philidor Rx Services, the Pennsylvania- based specialty pharmacy that marketed the drugmaker’s dermatology medications. They said the matter remained under investigation by a special board committee, with no timetable for a final report.

Activist short- seller Andrew Left’s Citron Research last month alleged Valeant and Philidor appeared to have created a “network of phantom captive pharmacies” as part of a “fraud to create invoices to deceive the auditors and book revenue.”

Valeant denied the allegations. But the company cut ties with Philidor on Oct. 30, after the nation’s three top pharmacy benefit providers halted all interactions with the pharmacy.

Valeant separately faces investigations of its drug- pricing and distribution by federal prosecutors in Massachusetts and New York, along with the Senate Special Committee on Aging.

Asked if Valeant officials were sure the firm faced no big new questions, Pearson said, “We’re unaware of any other issues.” But he added: “In a company of this size, it’s impossible to have full knowledge of everything.”

Pearson said Valeant plans to have a new distribution system in place for the firm’s dermatology products within 90 days. The system is expected to include at least one specialty pharmacy.

2013 PHOTO BY RYAN REMIORZ, THE CANADIAN PRES VIA AP The company’s headquarters near Montreal. Valeant cut ties with Philidor on Oct. 30, after the nation’s three top pharmacy benefit providers halted all interactions with the pharmacy.

BLOOMBERG VIA GETTY IMAGES CEO J. Michael Pearson, shown in May, said Tuesday that cash flows are “strong.”