Shares in Canadian drugmaker Valeant decline steeply for second day running

Shares of Valeant Pharmaceuticals International Inc slumped about 18 per cent on Monday, the second consecutive day of steep declines, wiping out more than $6 billion in the Canadian drugmaker's market value since Thursday.

The stock, which closed down about 11 percent in regular trading, extended losses by as much as 9 per cent after the Wall Street Journal reported that Valeant was planing to restate earnings following an internal review.

The review was a response to concerns about the conduct of a specialty pharmacy called Philidor that distributed a number of Valeant products, it added.

The earnings restatement was related to sales by Valeant to a distributor, the Journal said.

Valeant's stock closed down $9.07 at $75.92 on Monday. It ended 9.7 per cent lower on Friday, after Wells Fargo started coverage on the company with an "underperform" rating.

“We believe the Valeant board and management have made decisions that may have put Valeant at significant business and reputational risk,” Wells Fargo analyst David Maris wrote.

The stock was also pressured by widespread concerns about Valeant’s failure to say when it would release calendar 2015 earnings, investors said.

More than 40 per cent of investors expect Valeant to announce earnings in the first week of March, and nearly 30 per cent expect it by next Monday, according to a survey conducted by Evercore.

The survey also found that just over half of investors expect Michael Pearson to return as chief executive after taking a leave of absence for medical reasons late last year.

Valeant was pummeled late last year when questions about its business and accounting practices spooked investors, with the stock ending 2015 down about 70 per cent from its August high of $263.81. The stock had fallen 16 per cent this year as of Friday’s close.

Valeant’s options were heavily traded on Monday with 130,000 contracts changing hands, 3.6 times the average daily volume. Trading appeared to be a mix of bullish and bearish bets, according to options analytics firm Trade Alert.

The company’s Toronto-listed shares closed about 11 per cent lower at C$104.16.

Reuters