Embattled Valeant Pharmaceuticals International Inc (VRX.N, VRX.TO) said on Wednesday it has added a representative from shareholder Pershing Square Capital Management to its board of directors as well as two other new directors.
Pershing Square, a U.S. hedge fund run by activist investor Bill Ackman, bought a stake in Valeant last year when the drug-maker’s shares were on the rise. They have fallen 68 percent since.
Last fall, the Laval, Québec-based company became the target of two U.S. state investigations into its drug pricing practices, and its relationship with Philidor RX Services, a pharmacy selling its dermatology products, came under scrutiny and was dissolved.
During the last two weeks, the company delayed its annual financial filing with regulators, postponed a preliminary earnings announcement, and said it would restate financials. Chief Executive Officer Michael Pearson returned from a two-month medical leave and a top dermatology executive left. It also disclosed an investigation by the U.S. Securities and Exchange Commission.
Stephen Fraidin, a veteran Wall Street lawyer who is vice chairman at Pershing Square, joined the board, Valeant said. He previously worked at the Kirkland & Ellis law firm before joining Pershing last year.
Fred Eshelman, a drug executive who founded Furiex Pharmaceuticals Inc, and Thomas Ross, an academic who is a fellow at Duke University and president emeritus of the University of North Carolina, also joined the board.
Anders Lonner, former CEO of Swedish specialty drug company Meda AB (MEDAa.ST), stepped down from the board, Valeant said. The board now has 14 members.
Wells Fargo analyst David Maris, who has an “underperform” rating on the stock, said in a research note that Pershing Square had proposed Eshelman for the board at Allergan Inc during its and Valeant’s failed hostile bid for the company.
Maris said investors will likely have reservations about Ross as well, given his ties to Duke University, to which CEO Pearson has donated US$45 million.
Valeant plans to report preliminary fourth-quarter earnings and hold a conference call on March 15.
On Tuesday, Ackman said the company will reveal “messy” fourth- and first-quarter results, and said Valeant needed to stabilize soon. If not, new management will be brought in or the company will be sold, he said.
Valeant’s board set up a committee last year to look into the relationship between Valeant and Philidor. As a result of that on-going investigation, it is restating financials. The committee is advised by Mark Filip, a partner at Kirkland & Ellis.
On Wednesday, its shares rose 6.6 percent to US$67.20.
(Reporting by Caroline Humer in New York and Ankur Banerjee in Bengaluru; Editing by Ted Kerr and Jeffrey Benkoe)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Christinne Muschi