VRX - Valeant Pharmaceuticals International Inc.

[cogitator8]

As I mentioned it was small case study and they plan to do further study: here is the abstract:

 

70

TI

Novel treatment of onychomycosis using over-the-counter mentholated ointment: a clinical case series.

AU

Derby R, Rohal P, Jackson C, Beutler A, Olsen C

SO

J Am Board Fam Med. 2011;24(1):69.

 

BACKGROUND: current medication treatments for onychomycosis have less than full cure-rate efficacy and have the potential for adverse side effects. Vicks VapoRub (The Proctor&Gamble Company, Cincinnati, OH) has been advocated in the lay literature as an effective treatment for onychomycosis. This pilot study tested Vicks VapoRub as a safe, cost-effective alternative for treating toenail onychomycosis.

METHODS: eighteen participants were recruited to use Vicks VapoRub as treatment for onychomycosis. Participants were followed at intervals of 4, 8, 12, 24, 36, and 48 weeks; digital photographs were obtained during initial and follow-up visits. Primary outcome measures were mycological cure at 48 weeks and clinical cure through subjective assessment of appearance and quantifiable change in the area of affected nail by digital photography analysis. Patient satisfaction was a secondary outcome, measured using a single-item questionnaire scored by a 5-point Likert scale.

RESULTS: fifteen of the 18 participants (83%) showed a positive treatment effect; 5 (27.8%) had a mycological and clinical cureat 48 weeks; 10 (55.6%) had partial clearance, and 3 (16.7%) showed no change. All 18 participants rated their satisfaction with the nail appearance at the end of the study as "satisfied" (n = 9) or "very satisfied" (n = 9).

CONCLUSIONS: Vicks VapoRub seems to have a positive clinical effect in the treatment onychomycosis.

AD

US Air Force 375th Medical Group, Family Medicine Residency Program, Belleville, IL, USA. Richard.derby-02@scott.af.mil

PMID

21209346

 

 

[Picasso]

This was 2011.  Where is the evidence that they "plan to do further study?"

[cogitator8]

BTW Jublia has only 15-18% efficacy at best with ingrown toenail as side effect. Here is a summary:

 

Although a stronger and more localized treatment sounds promising, both Jublia and Kerydin have mediocre results at best. First of all, these medications need to be applied daily for 48 weeks, and can have potential side effects, such as ingrown toenails, redness, itching, swelling, burning or stinging, blisters and pain.  Secondly the cost is prohibitive, a small (4ml) bottle going for $560 dollars – not covered by most insurance. Thirdly, during the entire year of using Jublia, you are prohibited from getting a pedicure or painting your toenails. Most importantly, however is the low efficacy rate. In clinical trials daily use of Jublia for 48 weeks resulted in complete cure of nail fungus in 15-18% of patients. Daily use of Kerydin resulted in cure for 6-9% or study subjects.

 

 

[cogitator8]

My point being: Jublia is ony 15-18 % effective, Drug of choice ia Lamisil, with 76% cure rate ! It does have side effect but you can monitor liver test during treatment, it is given for 6 weeks only !

[Picasso]

So you think a study of 18 participants is proper?

 

Normal size of a phase 1 study?

 

Phase 1 studies are typically a few times higher than 18 participants.  And how hard is it to give vicks vaporub to hundreds of people to test?  Give me a freaking break.

[cogitator8]

We know this and Insurance companies will soon jump at this, I am sure everybody knows when insurance companies put the drug in Tier3, game is over for that drug, so I will be looking for this and will post that info when that happen.

[rb]

Phases and sizes for clinical trials.

 

https://en.wikipedia.org/wiki/Phases_of_clinical_research

[CONeal]

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?

 

 

 

A pharm rep would come in and literally site on site for weeks working with the fulfillment center. Making sure everything was up to speck and helping them work through issues that occurred.  This was a little different then a regular audit that would occasionally occur.  The times I know this occurred was after a problem occurred with one of their drugs and also when the pharmacy was getting up to speed and having QC issues.

 

Several reasons a pharm rep could have a email address from the pharmacy fulfillment center.  Some of those reasons could be a mundane as keeping work assignments separate or even keeping track of system shutdowns and facility issues.

 

This has been a few years ago and the company is no longer in business.  In the past this wasn't an issue unless some kind of rule changed.

[lschmidt]

It is a statistical reality that most clinical trials find false results and have no value:

 

http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.0020124

[CONeal]

So you think a study of 18 participants is proper?

 

Normal size of a phase 1 study?

 

Yes, that is about a Phase 1 study

[Liberty]

BTW Jublia has only 15-18% efficacy at best with ingrown toenail as side effect. Here is a summary:

 

Although a stronger and more localized treatment sounds promising, both Jublia and Kerydin have mediocre results at best. First of all, these medications need to be applied daily for 48 weeks, and can have potential side effects, such as ingrown toenails, redness, itching, swelling, burning or stinging, blisters and pain.  Secondly the cost is prohibitive, a small (4ml) bottle going for $560 dollars – not covered by most insurance. Thirdly, during the entire year of using Jublia, you are prohibited from getting a pedicure or painting your toenails. Most importantly, however is the low efficacy rate. In clinical trials daily use of Jublia for 48 weeks resulted in complete cure of nail fungus in 15-18% of patients. Daily use of Kerydin resulted in cure for 6-9% or study subjects.

 

The figure you quote is for "clear toenail" with 0% impairment. Sounds like in light cases, the nail isn't damaged so if you clear the fungus, the nail is clear. In more severe cases, you have to wait for the nail to grow back for it to be clear.

 

The efficacy number for testing fungus-free if 53-55%. Efficacy with "5% visible toenail impairment" is 23-26%

 

Probably the kind of things that a doctor explains to patient (ie. you might not have a clear nail right away at the end of the treatment, but we'll test for the fungus, then you just wait for nail to grow, etc).

 

http://www.jubliarx.com/efficacy-side-effects

 

http://www.jubliarx.com/about-toenail-fungus

 

"Treatment challenges: Additionally, the time it takes for a healthy nail to grow back varies from person to person. Even after the fungus has been eliminated, nail regrowth can sometimes take a year or longer."

 

But hey, I'm not a doctor, this is just a bit of googling...

[merkhet]

A pharm rep would come in and literally site on site for weeks working with the fulfillment center. Making sure everything was up to speck and helping them work through issues that occurred.  This was a little different then a regular audit that would occasionally occur.  The times I know this occurred was after a problem occurred with one of their drugs and also when the pharmacy was getting up to speed and having QC issues.

 

Several reasons a pharm rep could have a email address from the pharmacy fulfillment center.  Some of those reasons could be a mundane as keeping work assignments separate or even keeping track of system shutdowns and facility issues.

 

This has been a few years ago and the company is no longer in business.  In the past this wasn't an issue unless some kind of rule changed.

 

Thanks for the insight, CONeal.

[KCLarkin]

Merkhet, I think the risk is real but the probability is overstated. What is the base rate of pharma companies being brought down by overzealous regulators? Even a repeat offender like DaVita gets to settle for relatively modest amounts:

http://www.healthcarefinancenews.com/news/davita-healthcare-cfo-resigns-after-settlements-sting-dialysis-provider

[merkhet]

Merkhet, I think the risk is real but the probability is overstated. What is the base rate of pharma companies being brought down by overzealous regulators? Even a repeat offender like DaVita gets to settle for relatively modest amounts:

http://www.healthcarefinancenews.com/news/davita-healthcare-cfo-resigns-after-settlements-sting-dialysis-provider

 

I mean the base rate for any company being brought down by regulators is rather low -- but the sample size is also low and may skew the underlying probabilities.

 

Also, I don't necessarily think that they can bring Valeant down to $0 or anything like that... but finding a way to hurt them by making it so that pharmaceutical companies can't have any direct relationships with specialty pharmaceutical companies? That's not outside the realm of possibility.

 

My comments are mostly borne out of just wanting to make sure that people are aware that there exists a tail risk. I haven't a clue what the probability is for the tail risk so stay safe out there, folks!

[original mungerville]

My point being: Jublia is ony 15-18 % effective, Drug of choice ia Lamisil, with 76% cure rate ! It does have side effect but you can monitor liver test during treatment, it is given for 6 weeks only !

 

Lamisil with ingestion (potentially leading to liver damage) has a 70-80% cure rate. Lamisil without exposing your liver to damage has 10%.

 

Jublia does not expose liver to damage and so a 15-20% success rate is 50-100% better than Lamisil. I'm not even a doctor and I know that.

 

[Guest Schwab711]

So you think a study of 18 participants is proper?

 

Normal size of a phase 1 study?

 

Phase 1 studies are typically a few times higher than 18 participants.  And how hard is it to give vicks vaporub to hundreds of people to test?  Give me a freaking break.

 

I was just about to clarify the comment since I was worried it would be taken it extremely literally. My point of writing it, was you are ignoring a war (learning about VRX) to win a small battle (fighting over inconsequential details). My comment wasn't meant to imply that this Vick's study has merit or whatever conclusion you got from my message (if we were all discussing any other stock I don't think we would be so strict with detail - would you really have been more receptive to Cogitator's comment if the study had 54 or 72 people? That's why I wrote my comment.). I just don't see the value in asking a specific question of a board member with relevant experience and then jumping down their throat over a small detail because you don't like their answer. If you don't like the size of the sample then ignore the response. There are also plenty of phase 1 studies that use insignificant sample sizes (<30 or <50). I'm sure this study was done with cost savings (for the clinic individually) in mind; which brings up the question of how much are you willing to spend now to potentially save money in the future? The majority of costs to run a study (in general and not a phase trial) are not related to the cost of the drug involved (which shows your familiarity with pharmaceutical/healthcare industry). I think it benefits everyone to hear from medical/healthcare professionals as opposed to only the opinions of those learning on the fly.

 

If you are going to focus on details of posts, why don't you calculate FCF = OCF - CapEx? That includes D&A. How are you arriving at a FCF >> OCF?

 

Also, your definition of "durable" revenue is not consistent with VRX's definition. Should we agree to disagree about Cogitator's study and phase 1 trial sizes?

[original mungerville]

 

What do we think of this article?:

 

http://www.bloombergview.com/articles/2015-10-26/valeant-s-pharmacy-relationships-were-complicated?cmpid=yhoo.headline

 

Does it seem fair / balanced to other posters?

[KCLarkin]

We know this and Insurance companies will soon jump at this, I am sure everybody knows when insurance companies put the drug in Tier3, game is over for that drug, so I will be looking for this and will post that info when that happen.

 

Schwab, I think our point is that cogitator is lying when he claims to be a physician. An anonymous newbie, with a pseudonym that is an anagram for "Citro 8 Goat" arrives to tell us that Jublia is doomed because of a statistically insignificant study published in 2011. Maybe I am just suspicious from spending so much time with Andrew Left, but that really does sound fishy.

[Picasso]

I was just about to clarify the comment since I was worried it would be taken it extremely literally. My point of writing it, was you are ignoring a war (learning about VRX) to win a small battle (fighting over inconsequential details). My comment wasn't meant to imply that this Vick's study has merit or whatever conclusion you got from my message (if we were all discussing any other stock I don't think we would be so strict with detail - would you really have been more receptive to Cogitator's comment if the study had 54 or 72 people? That's why I wrote my comment.). I just don't see the value in asking a specific question of a board member with relevant experience and then jumping down their throat over a small detail because you don't like their answer. If you don't like the size of the sample then ignore the response. There are also plenty of phase 1 studies that use insignificant sample sizes (<30 or <50). I'm sure this study was done with cost savings (for the clinic individually) in mind; which brings up the question of how much are you willing to spend now to potentially save money in the future? The majority of costs to run a study (in general and not a phase trial) are not related to the cost of the drug involved (which shows your familiarity with pharmaceutical/healthcare industry). I think it benefits everyone to hear from medical/healthcare professionals as opposed to only the opinions of those learning on the fly.

 

If you are going to focus on details of posts, why don't you calculate FCF = OCF - CapEx? That includes D&A. How are you arriving at a FCF >> OCF?

 

Also, your definition of "durable" revenue is not consistent with VRX's definition. Should we agree to disagree about Cogitator's study and phase 1 trial sizes?

 

Okay first of all cogitator does not have relevant experience.  It's painfully obvious that "he" is not a doctor and is simply spreading his FUD for whatever reasons. 

 

Second, if you can't tell that cogitator is not a doctor, how can you tell that Valeant is a fraud?  I can tell you that it's a heck of a lot easier to tell with cogitator. 

 

As for OCF/FCF, OCF for next year should be around $6 billion.  My FCF estimates are less than that.

 

Edit: And as far the Vic's vs. Jublia thing goes.  Don't you think that P&G would have picked up on this from 2011 and completed  a real clinical study?  I guess doctors are supposed to scrape down patient nails and tell people to keep apply Vic's.  Uh huh...  If you search the internet you'll find a lot of people claiming that probotics, herbal supplements, vinegar, and who knows what also cures their fungal disease. 

[namo]

 

What do we think of this article?:

 

http://www.bloombergview.com/articles/2015-10-26/valeant-s-pharmacy-relationships-were-complicated?cmpid=yhoo.headline

 

Does it seem fair / balanced to other posters?

It seems fair to me, but I'm biased because I like Matt Levine. :)

 

To clarify: the big overhang (accounting fraud) does seem cleared for VRX, which is nice, but it's not clear whether legal/regulatory issues might follow.

I do agree with the (other) bulls that it shouldn't impact VRX's business terribly. We never know when a black swan can come (fines + regulatory overhang => degradation of trust and business environment => downward spiral, covenant breaches, default, ...), but it seems to me we're very far from it still.

I don't especially believe in Cash EPS, or great growth in years to come (expenses are not one-off if VRX keeps paying to grow and to deliver the expected results), but we're not really paying for it at the current price.

 

Disclosure: I have a small long position in VRX (via options and stock) since last Friday.

(At much higher levels, like 230+, I would have been a bear with no position. But I only started following the drama recently.)

[rishig]

I have mostly stayed away from Valeant so far. For the moment, ignoring all the current developments, I would like to get a quick overview of the trailing numbers.

 

I understand there are a lot of one time numbers not representative, but instead of looking at Cash EPS (which I am not even sure how to reconcile with reported EBITDA), if someone can give an update on past 4 years EBITDA and expected EBITDA going forward, that would be great.

 

Cursory look shows EBITDA of ~$4.5 billion and a EV of ~$65 billion. Is this wrong? If correct, why is this cheap?

[cogitator8]

I think just because I dont agree with you, you think I am lying ? I think you are really are a victim of your position and not seem to get the point. I really don't feel the need to defend myself, you can check me out, I can give you my info. It is your money which is at stake. So there is no need to get personal here, that is unprofessional !

[cogitator8]

So Schwab, here is my website: Simplycare.net, check out my credential, and hope this will shut you up, and in future try to learn than blame others.

[cogitator8]

BTW, I have 15+ years of track record of investing and have read more annual reports than you can count. Value Investing is a scientific are and so is medicine, Graham noted in one of his letters  that a physician can be a very good investor due to their ability to calulate odds and develop deep analytical thinking. So i dont know what you do for living but try to be respectful of other professional, in my case I have dual professions !

[merkhet]

So Schwab, here is my website: Simplycare.net, check out my credential, and hope this will shut you up, and in future try to learn than blame others.

 

I don't think Schwab was the one who was questioning your credentials.