Liberty Posted July 15, 2014 Share Posted July 15, 2014 New, desperate presentation by AGN attacking VRX: http://www.allergan.com/assets/pdf/investor_presentation_ju114_2014.pdf Lots of unreliable IMS data again (the same source they previously used to claim that some products were sold by VRX while they actually weren't, or not in all countries, and that doesn't cover all distribution channels)... They're setting themselves up to look like fools, because Valeant can just release all the data they're asking for on their top 15 products and B&L sales and such. They already said they would release that stuff, and it's not like IMS health knows better what the company is selling than the company itself. Link to comment Share on other sites More sharing options...
yadayada Posted July 15, 2014 Share Posted July 15, 2014 I wonder if they just cut fat from R&D or are restructuring it? If R&D is not behaving efficiently and a lot of money is wasted, then just firing a few people probably won't do that much good? You probably have to completly redo the thing? Link to comment Share on other sites More sharing options...
Liberty Posted July 15, 2014 Share Posted July 15, 2014 I wonder if they just cut fat from R&D or are restructuring it? If R&D is not behaving efficiently and a lot of money is wasted, then just firing a few people probably won't do that much good? You probably have to completly redo the thing? Valeant you mean? They restructure it quite extensively (zero-budgeting, outsourcing lots of it to other labs (there's over-supply, so they get marginal cost on a lot of it), etc). This is all explained quite clearly in the 2 main presentations they gave to explain the AGN deal. There's over 1 hour of material just on R&D if you're interested. Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2014 Share Posted July 16, 2014 Ackman letter to the board of Allergan: http://online.wsj.com/articles/ackman-rebukes-allergan-board-over-response-to-valeant-takeover-bid-1405516592 http://online.wsj.com/article/PR-CO-20140716-907178.html I ask that you consider the below questions in light of your published statements that the Valeant offer is "grossly inadequate." If today's discounted value of the Valeant bid of $171 per share "grossly undervalues" Allergan then: Why did Mr. Pyott sell $31 million dollars of common stock at $123 per share in February of this year? Why did other executives sell an additional $57 million of stock at $119 dollars per share in the first quarter of this year? [...] Why is Allergan contemplating taking on billions of dollars of leverage and initiating a multibillion dollar buyback at a likely substantial premium to today's stock price when it was unwilling to repurchase stock less than a year ago at half of today's stock price? Ouch. Webcast tomorrow: Pershing Square also announced it will hold a webcast on Thursday, July 17, at 8:30 am EDT to discuss Allergan's corporate governance and other aspects of its business and operations. The webcast will include an open Q&A for investors. Details for the webcast are as follows: Date: Thursday, July 17, 2014 Time: 8:30 a.m. EDT Webinar Livestream: advancingallergan.com Link to comment Share on other sites More sharing options...
Guest 50centdollars Posted July 16, 2014 Share Posted July 16, 2014 http://www.bnn.ca/News/2014/7/15/Valeant-looks-for-acquisition-targets-to-dodge-taxes-Melnyk.aspx Melnyk speaks about Valeant Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2014 Share Posted July 16, 2014 http://www.bnn.ca/News/2014/7/15/Valeant-looks-for-acquisition-targets-to-dodge-taxes-Melnyk.aspx Melnyk speaks about Valeant That's the kind of guy I want to listen to.. He stepped down as Biovail’s chairman in 2007, just one day after he and then CEO Kenneth Howling received a notice from the U.S. Securities and Exchange Commission alleging breach of securities laws. The SEC stated that , “present and former senior Biovail executives, obsessed with meeting quarterly and annual earnings guidance, repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving earnings goals,” according to a press release. Melnyk was banned from holding a senior role at a public company in Canada for five years in 2011 and fined $565,000 in addition to the $1 million previously paid in a settlement. He says: “It’s nonsense. They [Valeant] did 100 acquisitions and I bet you five of them are synergistic from a business perspective. From a tax perspective, what they did is kind of worse. They do the acquisitions not for synergies of business, but to avoid or to make sure they pay a lower tax rate,” Melnyk said. Except Valeant doesn't include tax benefits in its deal models..? Only the biovail deal was about changing the tax domicile..? And they've shown that they get the synergies they claim to get if you look at how their early deals turned out..? Maybe if the US wants to make its tax code even more restrictive and start taxing foreign companies' foreign operations, things will change, but I think there's more likelihood that the US will eventually get a tax system that is more harmonized to the rest of the world so its companies are more competitive, not less harmonized. In the meantime, Valeant, as a Canadian company, appears to be playing by the rules (most of its US tax is shielded by interest expense there, not by anything more fancy than that). In any case, seems like a bitter guy talking about what he doesn't know. Except maybe moving for tax reasons, since he lives in Barbados. Update: Watching the video now. Holy crap. He actually says, while talking about how the synergies are 'fake', and I quote: "What does a company that makes Botox have to do with a company that makes dermatologicals? There's no synergies there." Even the TV host pushes back against that, and he says that she should be on the spin team of Valeant. What a clown that guy is. Link to comment Share on other sites More sharing options...
Liberty Posted July 17, 2014 Share Posted July 17, 2014 Ackman's call just ended. Very good stuff, goes into a lot of detail about a lot of things (it's almost 3 hours long). I encourage everybody who's interested by VRX-AGN to listen. I'm sure the replay and slides will be available here soon: http://advancingallergan.com In the meantime, I have recorded the call, here's the audio file if you want it: https://www.dropbox.com/s/alrvrqs73lvycwl/2014-jul-17-ackman-AGN-VRX.m4a Link to comment Share on other sites More sharing options...
bmichaud Posted July 17, 2014 Share Posted July 17, 2014 Thanks a lot Liberty! Link to comment Share on other sites More sharing options...
Liberty Posted July 18, 2014 Share Posted July 18, 2014 http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Valeant-Pharmaceuticals-Files-Investor-Presentation/default.aspx http://www.sec.gov/Archives/edgar/data/885590/000119312514272314/d761372dex992.htm Update on B&L growth. Paulson on merger: http://blogs.wsj.com/moneybeat/2014/07/16/john-paulson-allergan-worth-220share-if-valeant-bid-goes-through/ Link to comment Share on other sites More sharing options...
loganc Posted July 18, 2014 Share Posted July 18, 2014 http://www.sec.gov/Archives/edgar/data/885590/000119312514272314/d761372dex992.htm Update on B&L growth. House of cards. Link to comment Share on other sites More sharing options...
giofranchi Posted July 18, 2014 Author Share Posted July 18, 2014 Thanks a lot Liberty! The work Liberty is doing on this company is just great! And in the end I think he will be justly and greatly rewarded. :) Gio Link to comment Share on other sites More sharing options...
krazeenyc Posted July 18, 2014 Share Posted July 18, 2014 http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Valeant-Pharmaceuticals-Files-Investor-Presentation/default.aspx http://www.sec.gov/Archives/edgar/data/885590/000119312514272314/d761372dex992.htm Update on B&L growth. Paulson on merger: http://blogs.wsj.com/moneybeat/2014/07/16/john-paulson-allergan-worth-220share-if-valeant-bid-goes-through/ (Rough numbers here) I respect Paulson's arb credentials. Curious though his argument (like Ackman's) is that if the deal gets done, VRX is worth roughly 180 USD per share. That's about 50% upside for VRX stock and only 38% for AGN. I wonder if he owns Valeant stock as well. I get that as an Allergan shareholder he can actually increase the likelihood of the deal occurring. Listening to the Ackman call I was shocked to hear that the Allergan CEO bonus is determined by how much R&D is spent (can someone confirm this?) rather than say the efficiency of the R&D spend. If Allergan is really so bloated --- that you could cut SG&A to 30% of revenues and chop R&D by (say) 30% and get some tax benefits you could easily triple net income from where it sits right now -- it would be a worthy acquisition for others as well. I wonder if another suitor will step up. Link to comment Share on other sites More sharing options...
Liberty Posted July 18, 2014 Share Posted July 18, 2014 Listening to the Ackman call I was shocked to hear that the Allergan CEO bonus is determined by how much R&D is spent (can someone confirm this?) rather than say the efficiency of the R&D spend. If Allergan is really so bloated --- that you could cut SG&A to 30% of revenues and chop R&D by (say) 30% and get some tax benefits you could easily triple net income from where it sits right now -- it would be a worthy acquisition for others as well. I wonder if another suitor will step up. How were 2008 bonuses determined under our Management Bonus Plan? At the beginning of 2008, the Compensation Committee established target bonuses for each participant in our Management Bonus Plan after review of the 50th percentile of the bonuses paid by the market, as a percentage of base salary, for that participant’s position. In February 2009, the Compensation Committee also determined the size of the bonus pool to be paid to employees based upon our 2008 performance. Our performance is measured by our achievement of three pre-established performance objectives. The performance objectives were based on our corporate strategies and objectives established as part of our annual operating plan process. For 2008, these performance objectives were as follows: (1) a pre-established target adjusted earnings per share of $2.60, or the EPS Target, (2) a pre-established target sales revenue growth in local currency of 17.8%, or the Revenue Target, and (3) a pre-established target research and development reinvestment rate of 16.97% of annual sales, or the R&D Reinvestment Target. The Compensation Committee determined that the EPS Target, the Revenue Target and the R&D Reinvestment Target were appropriate performance objectives for the purpose of establishing bonus payments because the EPS Target and the Revenue Target provide incentives for management to focus on increasing our revenues while meeting an adjusted earnings per share objective, balanced against our long-term objective of maintaining a significant research and development reinvestment rate to fuel our long-term growth. They changed the language a bit in later years, but if you look on p. 45 of the 2013 proxy you'll see it's still there. Link to comment Share on other sites More sharing options...
Liberty Posted July 21, 2014 Share Posted July 21, 2014 Valeant files complaint with the SEC about Allergan claims: http://www.forbes.com/sites/nathanvardi/2014/07/21/valeant-complains-to-sec-about-allergans-war-of-words/ http://www.newswire.ca/en/story/1389296/valeant-pharmaceuticals-contacts-quebec-and-u-s-regulators-about-allergan-s-false-and-misleading-statements "We can no longer tolerate unjustified attacks on Valeant's business and strongly believe we are obligated to take action to protect Valeant shareholders from Allergan's apparent attempts to mislead investors and manipulate the market for Valeant stock," said J. Michael Pearson, chairman and chief executive officer. "Allergan's continued disparagement of Valeant and repeated questioning of Bausch + Lomb's performance demonstrate their fundamental lack of knowledge about Valeant's business. Valeant has owned Bausch + Lomb for 11 months and the business has performed extremely well, delivering total organic growth of 11% since the acquisition, with over 90% of that growth attributable to volume. With our continued success with Bausch + Lomb, we believe that the Bausch + Lomb transaction is a perfect blueprint for our proposed merger with Allergan. "Finally, we do not believe that it is productive for either company to conduct due diligence in a public forum and although we have consistently offered Allergan the opportunity to conduct due diligence on our business, its management and board have refused, and have instead chosen to make misrepresentations and false statements about our business," continued Pearson. Allergan cutting 13% of its workforce: http://business.financialpost.com/2014/07/21/allergan-inc-to-cut-13-of-its-workforce-as-it-tries-to-fend-off-valeant-pharmaceuticals-hostile-offer/ Update: This website has been updated with the replay of the presentation, the slide deck, and other stuff: http://advancingallergan.com/ Link to comment Share on other sites More sharing options...
topofeaturellc Posted July 21, 2014 Share Posted July 21, 2014 Straight out of the Ackman playbook. Too bad they don't have a regulator to complain to as well. Link to comment Share on other sites More sharing options...
fareastwarriors Posted July 21, 2014 Share Posted July 21, 2014 In Takeover Bid, Valeant Complains to Regulators About Botox Maker http://dealbook.nytimes.com/2014/07/21/valeant-complains-to-regulators-about-allergan/?_php=true&_type=blogs&module=BlogPost-Title&version=Blog%20Main&contentCollection=Mergers%20&%20Acquisitions&action=Click&pgtype=Blogs®ion=Body&_r=0 Link to comment Share on other sites More sharing options...
Liberty Posted July 31, 2014 Share Posted July 31, 2014 http://ir.valeant.com/files/doc_presentations/2014/2Q14%20Presentation%20Draft%20Final2.pdf 2014 Second Quarter Total Revenue $2.0 billion; an increase of 86% over the prior year Overall organic growth was 4% for same store sales and 8% pro forma, excluding divested facial injectable products; Bausch + Lomb grew 12% 2014 Second Quarter GAAP EPS $0.37; Cash EPS $1.91, an increase of 43% 2014 Second Quarter GAAP Operating Cash Flow $376 million; Adjusted Operating Cash Flow $500 million Highlights of the Second Quarter Launched 17 new products in the U.S. year-to-date Sold facial injectable assets to Galderma S.A. for approximately $1.4 billion; $300+ million gain Proceeds will be used to fund Allergan and/or deploy on additional business development opportunities Received FDA approval for Jublia® earlier than expected; stronger than anticipated label Reached agreement with Irish Government and Unions to successfully restructure the Bausch + Lomb contact lens plant in Ireland Signed three small, but critical business development deals in Indonesia, the Middle East and North Africa, and Asian colored contact lens Items to Be Discussed on the Conference Call Scheduled for 8:00 am ET Today Second Quarter 2014 review Financial guidance for 2014 Financial outlook for 2015 - 2016 Allergan update Presentation immediately available under the Investor Relations tab at www.valeant.com Link to comment Share on other sites More sharing options...
Liberty Posted July 31, 2014 Share Posted July 31, 2014 Here's the audio of the conference call if anyone wants it: https://www.dropbox.com/s/x66iutv3u5016i9/2014-Q2-CC-VRX.m4a Link to comment Share on other sites More sharing options...
zuokk Posted July 31, 2014 Share Posted July 31, 2014 http://business.financialpost.com/2014/07/31/valeant-pharmaceuticals-international-inc-shares-pummelled-on-lower-2014-2015-forecasts/ Link to comment Share on other sites More sharing options...
Liberty Posted July 31, 2014 Share Posted July 31, 2014 I think Mr. Market is completely missing the forests for the trees, which is great! I bought more today, and will consider picking a few more over time if it keeps going lower. The company has basically confirmed they're firing on all cylinders, with a bunch of new sizable launches (expenses show now, revenues will come later), solid organic growth all around, big generics are starting to fade behind and no big ones coming in the foreseeable future (though I wouldn't mind as long as the runoffs are profitable), expansions in sales and marketing, more bolt-ons in big new developing markets, promised synergies are happening and costs falling, said in Q&A that while they can't close big deals now because of AGN, they're still in discussion and have a good pipeline of mid-sized and big deals, etc. But all the market seems to see is the lower than expected guidance. Well, we need to look at how they arrived at those numbers, no? While Allergan is pulling all the stops and promising the moon and saying that they're going to start doing all kinds of things they haven't been doing for the past decade, Valeant is building a conservative forecast based on the mid-point between a scenario of no-acquisitions and just paying down the debt and another of relatively small capital deployment (no AGN deal, smaller amount of deals than what they did in the past year). Basically, under-promise so they can over-deliver later. And then they model the AGN-VRX merger, but use these conservative models as foundation too. Does anyone really think it's realistic that they would make zero acquisitions in 2015 and 2016? Or that they would deploy only 5bn and 10bn in 2015 and 2016? Just B&L was 8.7bn in 2013 and they had tons of smaller bolt-ons too... Yet Mr. Market seems to have just skipped to the end, saw the numbers, and thought it was too low. Link to comment Share on other sites More sharing options...
original mungerville Posted August 1, 2014 Share Posted August 1, 2014 I agree Liberty, VRX looks pretty cheap right now on a forward P/E basis given its growth potential. Around the time the pursuit of Allergan was announced, I had it as my largest position, then I had cut it in half, and then cut it to zero on the basis that there might be a good chance the price would come down (given the high debt, non-GAAP earnings, complicated story to some, bad spin from Allergan, etc.). Looks like the price has indeed come down so I guess I better start buying. Link to comment Share on other sites More sharing options...
Liberty Posted August 1, 2014 Share Posted August 1, 2014 Around the time the pursuit of Allergan was announced, I had it as my largest position, then I had cut it in half, and then cut it to zero on the basis that there might be a good chance the price would come down (given the high debt, non-GAAP earnings, complicated story to some, bad spin from Allergan, etc.). Looks like the price has indeed come down so I guess I better start buying. Congrats, looks like you timed things right, but be careful with those kinds of manoeuvres if it's a company you really like that you want to hold for the long term. If something had happened that had suddenly made the AGN acquisition very likely to happen, you might have missed your window. Link to comment Share on other sites More sharing options...
Guest wellmont Posted August 1, 2014 Share Posted August 1, 2014 I think Mr. Market is completely missing the forests for the trees, which is great! I bought more today, and will consider picking a few more over time if it keeps going lower. The company has basically confirmed they're firing on all cylinders, with a bunch of new sizable launches (expenses show now, revenues will come later), solid organic growth all around, big generics are starting to fade behind and no big ones coming in the foreseeable future (though I wouldn't mind as long as the runoffs are profitable), expansions in sales and marketing, more bolt-ons in big new developing markets, promised synergies are happening and costs falling, said in Q&A that while they can't close big deals now because of AGN, they're still in discussion and have a good pipeline of mid-sized and big deals, etc. But all the market seems to see is the lower than expected guidance. Well, we need to look at how they arrived at those numbers, no? While Allergan is pulling all the stops and promising the moon and saying that they're going to start doing all kinds of things they haven't been doing for the past decade, Valeant is building a conservative forecast based on the mid-point between a scenario of no-acquisitions and just paying down the debt and another of relatively small capital deployment (no AGN deal, smaller amount of deals than what they did in the past year). Basically, under-promise so they can over-deliver later. And then they model the AGN-VRX merger, but use these conservative models as foundation too. Does anyone really think it's realistic that they would make zero acquisitions in 2015 and 2016? Or that they would deploy only 5bn and 10bn in 2015 and 2016? Just B&L was 8.7bn in 2013 and they had tons of smaller bolt-ons too... Yet Mr. Market seems to have just skipped to the end, saw the numbers, and thought it was too low. here's the thing though, had it not reported earnings, it probably would have been down 80% of what it ended up being down simply because names like vrx got crushed yesterday. and it also was up big the day before. ultimately it's noise. and I see it's up today. the stock is basically stuck in a range for the last couple of months. Link to comment Share on other sites More sharing options...
Liberty Posted August 1, 2014 Share Posted August 1, 2014 here's the thing though, it probably would have been down 80% of what it ended up being down simply because names like vrx got crushed yesterday. and it also was up big the day before. it's noise. and it's up today. the stock is basically stuck in a range for the last couple of months. True, though Endo also had results yesterday and it wasn't nearly as bad, and the commentary on twitter and elsewhere seemed to highlight the lower guidance as the main thing that came out of yesterday rather than the actual operational results. But it's definitely a mix of things. Won't matter in the long-term, but it was a good buying opportunity IMO (though of course now that I've said this it will drop below 100 any moment...). Link to comment Share on other sites More sharing options...
Liberty Posted August 1, 2014 Share Posted August 1, 2014 The gloves come off, Allergan is suing: http://agn.client.shareholder.com/releasedetail.cfm?ReleaseID=863704 http://www.cnbc.com/id/101860781 Wow, the nerve on these guys to claim that Valeant was intending a tender offer from the start when Valeant clearly said that they'd been trying to talk to Allergan for months and their management would never engage and never did any due dilligence on Valeant with a NDA, and even after valeant went public with the offer they repeatedly offered to sit down with them and answer any questions and negotiate, but they never did, eventually forcing them to go the tender/special meeting route. You never know with the legal system, but I'd tend to trust the quality of the legal advice that Pershing Square and Valeant has been getting... Link to comment Share on other sites More sharing options...
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