and this is how shorts operate | 11 Aug 2016 12:53 ET |  |
(Adds investor comment, updates stock move)
NEW YORK, Aug 11 (Reuters) - Valeant Pharmaceuticals International Inc shares fell about 10 percent on Thursday as new details about a criminal investigation into the drugmaker raised investor concerns about risks related to the company's past business practices.
News of the investigation, reported by the Wall Street Journal on Wednesday, was a setback to the Canadian company's efforts clean up its image, with some in the market concerned it could face penalties and may have to pay more to borrow as renegotiates debt.
After the article was published, Valeant said in a statement it had disclosed it was being investigated by the U.S. Attorney's Office in October and that it continued to cooperate with that probe.
Concern about other investigations, which focused on its drug pricing and accounting practices, had already cut its share price by about 90 percent in one year.
The stock had gained 25 percent on Tuesday after Chief Executive Officer Joseph Papa, who joined in May, outlined a plan to sell assets, pay down debt and focus on dermatology, consumer and Bausch & Lomb eyecare.
Lawyers at the U.S. Attorney's Manhattan office are probing whether Valeant obscured from insurers its relationship with a specialty pharmacy, Philidor Rx, that helped inflate its drug sales, the Journal reported on Wednesday, citing sources.
The investigation could lead to criminal charges against former Philidor executives and Valeant as a company, the report added.
Laval, Quebec-based Valeant's U.S.-listed shares were down $2.61 at $24.71 on Wednesday. It peaked at $263.81 a year ago.
The investigation reflects lingering issues facing Valeant and shows that it is "nowhere close to out of the woods," said David Neuhauser, managing director of Livermore Partners, who added his firm covered its profitable short position in Valeant this quarter.