Andrew Left - Citron Research

Activist short seller calls out Valeant

Name: Andrew Left
Title: Founder of Citron Research

Short-seller Andrew Left set off one of the biggest firestorms in pharma last fall with one research report--and a few little attention-getting words: Valeant--Could this be the pharmaceutical Enron?

Left's Citron Research report went on to accuse the formerly high-flying drugmaker of ginning up false revenue through some fancy prescription shuffling at an affiliated specialty pharmacy. Valeant ($VRX)--and its valiant defender, Bill Ackman--tried to hit back with their own denials and numbers, but the bell had already rung. Reporters uncovered more questionable details about Valeant's relationship with Philidor; Valeant cut the pharmacy loose and admitted that the change would drag down 2015 financials. Meanwhile, an ongoing debate about the company's price-hike tactics--which Citron had spotlighted almost a month before its infamous report--made Valeant and its business model increasingly suspect.

Needless to say, Valeant's shares suffered. Left and his firm profited. But he wasn't finished with pharma yet--in November, Citron called Mallinckrodt ($MNK) "an even worse offender" on pricing than Valeant. That company had drawn fire before for jacking up the price of its H.P. Acthar Gel, but its latest--a 2,000% price increase in Canada on Synacthen, a treatment for infantile spasms--was far more controversial because of Citron's scrutiny. That company's shares plummeted as much as 26% that day, and continued to fall until they hit a low of $53.41 a few days later, down from more than $69 the previous week. The company rolled out a stock-buyback plan to appease investors, and with its help, the shares had recovered to about $69 by the end of February.

Just after Left's "Enron" report, he told The Wall Street Journal that in recent years, he's been targeting the pharmaceutical industry, partly because companies tend to be secretive, partly because some of them abuse their position in the markets. With a couple of high-profile challenges behind him--and new notoriety because of them--he might just continue to do so. Then again, his most recent target was energy drinks maker Monster Beverage.

-- Tracy Staton (email | Twitter)

For more:
Short-seller Citron spotlights Mallinckrodt as 'worse offender' than Valeant
Valeant unveils plan for getting its meds to patients after specialty pharmacy debacle

Andrew Left - Citron Research

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