VRX - Valeant Pharmaceuticals International Inc.

[Picasso]

Sears was so 2014.

 

We should just name the site Corner of Rollups and Value Traps.

[PatientCheetah]

Sold mine too  :-\ stock price did not react to news as expected

[original mungerville]

Are people not bothered at all by the fact that Valeant employees were using random pseudonyms in their e-mails at Philidor?

 

http://www.wsj.com/articles/valeants-ties-to-pharmacy-scrutinized-1445817449

 

Around the Phoenix-area offices of mail-order pharmacy Philidor Rx Services LLC, employees said they often ran into a friendly colleague named Bijal Patel who tracked prescriptions. But when the employees got an email from the colleague, they say he used a different name: Peter Parker, the alter ego of Spider-Man.

 

He was among a few workers at Philidor offices who went by one name in person and another in emails during the past two years, according to three former employees. Mr. Patel and the other people weren’t employed by Philidor, though the emails used a Philidor address, these people said. They were employees of drug company Valeant Pharmaceuticals International Inc.

 

http://www.wsj.com/articles/valeant-forms-board-committee-to-review-philidor-arrangement-1445856795

 

Valeant also said the new committee would investigate issues raised in Monday’s The Wall Street Journal, which reported that Valeant employees working in Philidor’s offices went by the names of fictional characters like “Peter Parker” in emails. The company said Monday that it was “not clear” whether the email issue violated any provision of the agreement between Valeant and Philidor.

 

Clearly, it's not illegal to use a pseudonym in your correspondence, but it is... odd.

 

Its odd but I don't really have a problem at this point, unless there are legal implications in terms of violating a provision of the agreement - as per your post. I mean using action hero pseudo-names is actually better in my book than using a fake, more realistic name, as it demonstrates that the persons with those weird but popular pseudo-names were not trying to hide the fact they were using fake names. So it seems more honest to me. I would like to hear the reason for the use of those names though.

 

If I was hiding my identity, I would not use Peter Parker, or Hulk or Batman as my fake name.

[Picasso]

Anyone remember when Eddie Lampert did this?

 

http://abcnews.go.com/Business/sears-ceo-edward-lampert-denies-online-pseudonym-interact/story?id=19747266

 

Pepperidge Farm remembers.

[S2S]

So we go from "the smoking gun" on the "pharmaceutical Enron" with "phantom pharmacies" that are "stuffing the channel" with "fake sales", trying to defraud a poor little "pharmacy that had never heard of them" to... what exactly?

 

After almost daily exposes by incrementally reputable organizations, do you actually think that the risk is contained? How about a DOJ investigation into a different VRX business?

 

http://www.nytimes.com/reuters/2015/10/26/business/26reuters-valeant-pharms-subpoena.html?src=busln&_r=1

[merkhet]

Clearly, it's not illegal to use a pseudonym in your correspondence, but it is... odd.

 

Is Merkhet your real name?

 

Valeant is clearly bothered. They said that will be one of the first, if not the first thing the special committee investigates.

 

Is that a real comparison?

 

If you think an online message board is a comparable situation, then... bless your heart, I suppose.

 

Context matters. Your comment is a little like saying it's okay to punch your spouse in the face because you saw Mayweather do that exact thing to Pacquiao on TV.

[CONeal]

Are people not bothered at all by the fact that Valeant employees were using random pseudonyms in their e-mails at Philidor?

 

http://www.wsj.com/articles/valeants-ties-to-pharmacy-scrutinized-1445817449

 

Around the Phoenix-area offices of mail-order pharmacy Philidor Rx Services LLC, employees said they often ran into a friendly colleague named Bijal Patel who tracked prescriptions. But when the employees got an email from the colleague, they say he used a different name: Peter Parker, the alter ego of Spider-Man.

 

He was among a few workers at Philidor offices who went by one name in person and another in emails during the past two years, according to three former employees. Mr. Patel and the other people weren’t employed by Philidor, though the emails used a Philidor address, these people said. They were employees of drug company Valeant Pharmaceuticals International Inc.

 

http://www.wsj.com/articles/valeant-forms-board-committee-to-review-philidor-arrangement-1445856795

 

Valeant also said the new committee would investigate issues raised in Monday’s The Wall Street Journal, which reported that Valeant employees working in Philidor’s offices went by the names of fictional characters like “Peter Parker” in emails. The company said Monday that it was “not clear” whether the email issue violated any provision of the agreement between Valeant and Philidor.

 

Clearly, it's not illegal to use a pseudonym in your correspondence, but it is... odd.

 

Its odd but I don't really have a problem at this point, unless there are legal implications in terms of violating a provision of the agreement - as per your post. I mean using action hero pseudo-names is actually better in my book than using a fake, more realistic name, as it demonstrates that the persons with those weird but popular pseudo-names were not trying to hide the fact they were using fake names. So it seems more honest to me. I would like to hear the reason for the use of those names though.

 

If I was hiding my identity, I would not use Peter Parker, or Hulk or Batman as my fake name.

 

The only crime in this was selecting such an idiotic name for his email address.  I know of other distributers where this occurs, its mainly to make sure their fulfillment center is working correctly and without issues.  This is even more common when you are working with a new distributer, in Philidor's case they were a new pharmacy so of course drug companies are going to have reps there making sure it will be a reliable channel and they don't screw up their drugs.

 

It did take me by surprise that they are investigating this, not sure if they are just making sure they can say they covered all their bases or what.

[Liberty]

Clearly, it's not illegal to use a pseudonym in your correspondence, but it is... odd.

 

Is Merkhet your real name?

 

Valeant is clearly bothered. They said that will be one of the first, if not the first thing the special committee investigates.

 

Is that a real comparison?

 

If you think an online message board is a comparable situation, then... bless your heart, I suppose.

 

It is certainly a weird thing, and I'm curious to see what they'll find there. But to jump from that to anything else is clearly premature, just like jumping from "they didn't disclose Philidor" to "it's a fraud" was.

 

I'm pretty sure that if you put any big pharma (JNJ, Pfizer, etc) under the kind of microscope that Valeant is under, you'd find a few strange things in various corners of the company. Even Buffett said that he knew that there was stuff he wouldn't approve of going on at Berkshire (and then Sokol happened). The question is, how material is it?

 

It seems legal for manufacturers to partner with and also to own distributors, so having Valeant employees asking about sales figures and such (probably working on making sure the companies were interfacing smoothly and that they could rely on them as a distributor) isn't in itself a problem. And if you want to hide something, do you really use superhero names but then walk around and give your real name and let everybody know that you work at Valeant?

 

Something's weird, but it doesn't sound like a "smoking gun" (unless the definition of what that means has recently been changed...).

[KCLarkin]

Is that a real comparison?

 

If you think an online message board is a comparable situation, then... bless your heart, I suppose.

 

I don't know. If Peter Parker knew, that in the future, Valeant would be accused of being the next Enron he might have avoided the pseudonym. It only looks suspicious in retrospect. We have no idea why those names were used. Perhaps it was an inside joke by the I.T. department.

 

Regardless, Valeant has suffered numerous allegations. These were proven false. They have responded transparently and honestly about the actions of a 3rd party. They have vowed to investigate. Instead of CFOs and board members resigning, they have ex-board members and ex-CFOs returning to work. This sounds like a no smoke no fire situation. But what do I know?

 

And have the shorts responded to the allegations that they are posting fraudulent posts on Cafepharma? Or that propublica.org is secretly owned by Philidor?

 

 

[KCLarkin]

Sold mine too  :-\ stock price did not react to news as expected

 

My theory: The stock was driven down by "tourists" in the stock all rushing for the exits on the same day in a panic. The small "cabal" of shorts probably started covering on Wednesday. The long term owners (VA, Ackman, Greenberg, Simpson) are too concentrated to materially add to their positions. All the momentum and growth players are gone. The value players are going to need some time to figure this out. So who was buying on Friday? People expecting a short squeeze on Monday. Who is selling Monday? PatientCheetah

 

Apparently, we are not allowed to use this analogy, so I will use pseudonyms. It reminds me of a computer company, Orange, that I bought in 2013. It had a sentiment-driven crash as the ownership transferred from growth and momo players to value investors. Despite revenue growth, growing dividends, and a massive buyback, the stock didn't start working again until "Snow White" started tweeting about this "no-brainer". IIRC, that was about 4 months after the bottom.

 

Still not convinced? Valeant's high today is $118. Orange's high is $118.13. To quote my good friend, Andrew Left, "These similarities are too close to ignore".

[PatientCheetah]

Too traumatized from the Ocwen experience, when I hear government subpoenas, I want to run :)

[Liberty]

Sold mine too  :-\ stock price did not react to news as expected

 

My theory: The stock was driven down by "tourists" in the stock all rushing for the exits on the same day in a panic. The small "cabal" of shorts probably started covering on Wednesday. The long term owners (VA, Ackman, Greenberg, Simpson) are too concentrated to materially add to their positions. All the momentum and growth players are gone. The value players are going to need some time to figure this out. So who was buying on Friday? People expecting a short squeeze on Monday. Who is selling Monday? PatientCheetah

 

Apparently, we are not allowed to use this analogy, so I will use pseudonyms. It reminds me of a computer company, Orange, that I bought in 2013. It had a sentiment-driven crash as the ownership transferred from growth and momo players to value investors. Despite revenue growth, growing dividends, and a massive buyback, the stock didn't start working again until "Snow White" started tweeting about this "no-brainer". IIRC, that was about 4 months after the bottom.

 

Still not convinced? Valeant's high today is $118. Orange's high is $118.13. To quote my good friend, Andrew Left, "These similarities are too close to ignore".

 

There's definitely a structural lack of buyers right now (because they are already full to the gills), and there's definitely no lack of sellers; and if the shorts have any kind of firepower (pretty sure there are all kinds of hedge funds now involved on the short side), they'll use it on days like today to try to send a signal to the rest of the market. So many market actors judge things by price action that if you can get a lower price, people won't look at any details and just conclude "oh, so the company didn't deliver". But this only works short term; in the long-term, what will matter is if there's any evidence of the company doing something wrong that is material, and if the business keep performing well and increasing IV.

[KCLarkin]

Too traumatized from the Ocwen experience, when I hear government subpoenas, I want to run :)

 

Here is a challenge for you: Find a major drug company that has never received a subpoena. I gave up after Merck, Pfizer, and Allergan.

 

I am not saying this isn't Ocwen. But I have placed my bet and I am comfortable, so far.

[Picasso]

Ocwen also had essentially just one business segment. Once they couldn't buy MSR's, they basically went into runoff versus being priced at a multiple of earnings. We've addressed what happens when you kill off a couple of these segments.

 

Anyone catch that interview of Left on Bloomberg?  What a guy. Complained that he pays more tax than Valeant and that he still thinks Valeant is faking sales. Oh and if the accounting isn't bad then it's about the insurance fraud.

[cogitator8]

Seriously does anybody think that Insurance compnies will pay that much money for Jublia anymore, they will push it down the tier and before you know you hit to cash flow. BTW Jublia is only 15% efficacious, not even 3rd drug of choice for toenail fungus, according to "UptoDate", which is the most trusted database used by US doctors. What I find interesting that anybody who is holding this stock, have they ever talked to a doctor about VRX products ?

[Picasso]

Seriously does anybody think that Insurance compnies will pay that much money for Jublia anymore, they will push it down the tier and before you know you hit to cash flow. BTW Jublia is only 15% efficacious, not even 3rd drug of choice for toenail fungus, according to "UptoDate", which is the most trusted database used by US doctors. What I find interesting that anybody who is holding this stock, have they ever talked to a doctor about VRX products ?

 

I thought you were a physican?  Please tell us all about your experience.

[cogitator8]

There was a small study where they used Vicks Vaporub and it cured toenail fungus. They are conducting a larger trial now. This is from Uptodate and since I am a physician, I can vouch for its accurarcy.

[cogitator8]

There are few data on the efficacy of a medicated chest rub containing eucalyptus oil, camphor, menthol, thymol, oil of turpentine, oil of nutmeg, and oil of cedar leaf (eg, Vicks VapoRub) in the treatment of onychomycosis. In a series of 18 patients who were instructed to apply this type of medicated chest rub to affected nails daily for 48 weeks, four patients (22 percent) achieved both clinical and mycological cure [70]

[Picasso]

So you think a study of 18 participants is proper?

[Liberty]

Sample size of 18. Wow.

 

I'm sure that all the specialists who are prescribing Jublia just have no idea what they're doing and that the business will be killed by Vicks any time now. At least it only cost 40m to develop, so they've more than paid it back by now ;)

[Picasso]

Maybe I'm wrong but you sound nothing like a doctor cogitator.

[KCLarkin]

Maybe I'm wrong but you sound nothing like a doctor cogitator.

 

Anyone else suspicous that his pseudonym is an anagram for "citro 8 goat"? What is your relationship to Citron and why did you eat the goat?

[merkhet]

The only crime in this was selecting such an idiotic name for his email address.  I know of other distributers where this occurs, its mainly to make sure their fulfillment center is working correctly and without issues.  This is even more common when you are working with a new distributer, in Philidor's case they were a new pharmacy so of course drug companies are going to have reps there making sure it will be a reliable channel and they don't screw up their drugs.

 

CONeal, can you elaborate on this? Do you mean that you know of other distributors where the pharmaceutical representatives come to make sure that everything is set up correctly? Or that you know of other distributors where the pharmaceutical representatives come to make sure everything is set up correctly by using pseudonyms for their e-mails to the distributors? I think you meant the former, but I might be wrong. I also understand if you're unable to elaborate because this is/was related to your job or something.

 

The main weirdness here for me comes not from the fact that they were using pseudonyms. That's one thing. It's that the WSJ article indicates that they were using their real name in person but their fake name for the paper trail. In other words, if I was working at Philidor, I know that Bob from Valeant is Bob from Valeant when we're talking in person, but he's Peter Parker when he's using our e-mail system. What purpose does the pseudonym serve then?

 

Zenaida and I were talking about this offline, and it's possible that KCLarkin is right that they're just being funny or something, and it only looks sketchy in retrospect. However, the probability that these people just have a weird sense of humor AND the probability that Philidor would be caught up in the California licensing board issue seems... small given that both of those things would have to be true.

 

It is certainly a weird thing, and I'm curious to see what they'll find there. But to jump from that to anything else is clearly premature, just like jumping from "they didn't disclose Philidor" to "it's a fraud" was.

 

I agree. I don't think it's a smoking gun. It's merely very, very strange.

And the optics look horrible... which matters in my argument below.

 

I don't know. If Peter Parker knew, that in the future, Valeant would be accused of being the next Enron he might have avoided the pseudonym. It only looks suspicious in retrospect. We have no idea why those names were used. Perhaps it was an inside joke by the I.T. department.

 

Regardless, Valeant has suffered numerous allegations. These were proven false. They have responded transparently and honestly about the actions of a 3rd party. They have vowed to investigate. Instead of CFOs and board members resigning, they have ex-board members and ex-CFOs returning to work. This sounds like a no smoke no fire situation. But what do I know?

 

And have the shorts responded to the allegations that they are posting fraudulent posts on Cafepharma? Or that propublica.org is secretly owned by Philidor?

 

I'll repeat here what I wrote to Liberty a few days ago. I don't think the issue here is necessarily accounting fraud.

 

There may be a slight business model issue concerning the fact that Pearson says that there were unit increases on top of pricing increases when, in fact, it's possible that the unit increases were really pricing increases in disguise. (i.e. a VC-esque model of giving away your drugs to as many people as possible and hoping to "hit the jackpot" on the few insurance companies that are willing to pay full freight) Now, that's not illegal, but I also don't know if it's sustainable.

 

(Disclaimer: I also don't know how prevalent the practice is of giving away low cost drugs and hoping to recoup from the "dumb money" insurance folks. Is the ratio 1000:1, 4:1, etc.? I have no idea, and I would be grateful to anyone who actually has numbers.)

 

The bigger issue to me is the tail risk that an ambitious government lawyer out there wants to run for office by taking down Valeant. Valeant currently is the poster boy for (A) tax inversion, (B) jacking up drug pricing and © possibly skirting California pharmaceutical licensing -- all during an election year. I suspect that there are government officials out there that would gladly give their left nut/ovary to try and hunt down Valeant for political gain.

 

A lot of people here have responded to the stuff that's coming out by saying "it's aggressive, but it's not illegal." I agree with most of that except for the California licensing board thing, which is still up in the air. However, what's illegal may not be the only problem here. Ocwen was in a slightly different situation given that it was under more direct regulatory scrutiny, but it seems somewhat relevant here. Arguably, Ocwen didn't actually do anything that was that bad -- but Lawsky took them to the cleaners anyway.

 

Allow me to relate a story from my misspent youth. Back in law school, a mentor of mine who was a year above me told me that, as soon as he was able, he was going to open a Swiss bank account and start putting some money in there "just in case [he] had to flee the country." So, I looked at him and said, "Warren, what are you planning to do that you need to start setting up a fund to flee the country?" I was intrigued because he was an ex-cop and pretty buttoned up, so I couldn't see him doing anything bad enough that he'd need the funds. And he looked at me and said, "whether you do something bad or not is irrelevant to whether there may come a time when you need to flee the country."

[KCLarkin]

There are few data on the efficacy of a medicated chest rub containing eucalyptus oil, camphor, menthol, thymol, oil of turpentine, oil of nutmeg, and oil of cedar leaf (eg, Vicks VapoRub) in the treatment of onychomycosis. In a series of 18 patients who were instructed to apply this type of medicated chest rub to affected nails daily for 48 weeks, four patients (22 percent) achieved both clinical and mycological cure [70]

 

Was this a double-blind study? What was the p-value?  Were there any AEs?

[Guest Schwab711]

So you think a study of 18 participants is proper?

 

Normal size of a phase 1 study?