Ackman Defends Valeant’s Drug Development on Investor Callby and
Investor says Valeant’s R&D programs are ‘mischaracterized’
Two drugs up for approval, research spending lags rivals
Billionaire investor Bill Ackman defended Valeant Pharmaceuticals International Inc.’s research and development program, citing two drugs making their way toward the market and another just cleared.
“People have mischaracterized Valeant’s R&D programs,” Ackman, whose Pershing Square Capital Management LP is one of the drugmaker’s biggest holders, said Wednesday on a conference call with investors. “This company has one of the most productive R&D programs of any pharmaceutical company in the country.”
Valeant has typically made deals to acquire drugs that were already on the market or late in development. While the company’s R&D spending almost doubled in the first quarter, to $103 million or about 4.3 percent of sales, that’s far below industry levels, according to a report from Pharmaceutical Research and Manufacturers of America, a Washington-based trade group. A PhRMA report last year said that its members spent an average of 18 percent of sales on research and development in 2013.
Chief Executive Officer Joe Papa is working to help the company recover from criticism of its business practices of acquiring drugs and raising prices. Advisers to the U.S. Food and Drug Administration voted Tuesday to recommend that the agency clear Valeant’s psoriasis drug with a label that warns of suicide risk and a risk management plan, and the FDA approved its Relistor tablets to treat opioid-induced constipation. Analysts expect Vesneo, Valeant’s drug for the eye disease glaucoma, to gain clearance Thursday.
Valeant rose 3.6 percent to $24.39 at 1:09 p.m. in New York. The stock has lost about 90 percent of its value since its August 2015 peak.
Valeant’s rights to Relistor came through its acquisition of Salix Pharmaceuticals, and an injected version of the drug had been approved in 2008.
The drugmaker paid $100 million to acquire the commercial rights to brodalumab, the psoriasis drug, from AstraZeneca Plc in September. Amgen Inc. had previously ended a collaboration to develop the drug with AstraZeneca when it appeared the medication might require a warning on suicide risk. The FDA is expected to decide whether to approve the drug for sale by Nov. 16.
Pershing Square owned about 9 percent of Valeant as of June 9, according to recent filings. Ackman joined Valeant’s board of directors earlier this year, along with Pershing Square’s Vice Chairman Stephen Fraidin.