Valeant ($VRX) ended the day down 12% yesterday on news coming out of Bloomberg that its former top execs are under a criminal probe from federal prosecutors.
The financial news service reports that prosecutors are looking into ex-CEO J. Michael Pearson as well as Howard Schiller, its former CFO who was also its interim CEO, according to people speaking to Bloomberg but who remain anonymous.
The people said that the authorities are investigating allegations over accounting fraud charges, specifically wedded to what is described as its “hidden ties” to Philidor Rx Services--a pharmacy company that Valeant is said to have secretly controlled. This probe has been ongoing for a year.
Bloomberg said charges could come for the execs “within weeks.”
Valeant did not respond to FierceBiotech, but released a statement saying: “We do not comment on rumors about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation. Valeant takes these matters seriously and intends to uphold the highest standards of ethical conduct.”
Valeant has endured increasing political and public scrutiny that saw it earlier this year scrap its 2016 guidance, delay its Q4 results, and confirm that it was being investigated by the SEC.
This was on top of longer-term issues, including its admittance of accounting missteps, a congressional drug pricing investigation, and the ongoing questions regarding its relationship with Philidor.
In March, after an extended sick leave, Pearson also left the company, but his tenure may still be hitting the company which has been trying to move on from its difficulties.
It got some good news in July, when its new oral formulation of the previously injectable-only med Relistor for certain forms of constipation gained FDA approval, and then an FDA panel backed its skin drug brodalumab for a U.S. green light.
But in the same week it was then hit with a rejection from the FDA for its experimental eye drug Vesneo (latanoprostene bunod ophthalmic solution), due to manufacturing issues (a common problem in 2016) coming out of its Bausch + Lomb unit.
The company was down 12.3% at the end of play yesterday, to less than $18 a share. It started 2016 with its shares worth just over $100 apiece.