MONTREAL — Valeant Pharmaceuticals rebounded on the stock market Friday, following several days of losses.
Shares of Canada's biggest publicly traded drug company gained nearly seven per cent at $153.96 in Friday morning trading.
That partially offset a nearly 37 per cent drop in the four prior days that wiped out $28.4 billion of Valeant's stock market value amid unresolved questions about some of its business practices.
The rebound comes ahead of a conference call on Monday, when Valeant's top officials plan to address and refute allegations that the company created a network of pharmacies to distribute its products and avoid the scrutiny of auditors.
Citron Research, a U.S. firm that says it examines fraudulent and over-hyped stocks, compared Valeant earlier in the week to bankrupt energy giant Enron.
Valeant (TSX:VRX) has denied the explosive, unproven allegations, and accused the firm of trying to reduce its share price — a move that could benefit traders who sell the stock "short" on the expectation they can buy it later after its value falls.
The accusations and big share price fluctuations have prompted Quebec's securities regulator to take the situation "very seriously" even though it hasn't launched a formal investigation into the company.
Some investors have taken advantage of the Valeant share meltdown to buy stock.
Activist investor Bill Ackman of Pershing Square Capital — a business partner with Valeant in its failed bid for Allergan — said he purchased more than two million Valeant shares, making it the company's second-largest shareholder.
Controversial hedge fund manager Martin Shkreli, who was roundly criticized by U.S. politicians for dramatically hiking the price of Daraprim after buying the drugmaker, tweeted he took a "long" position in Valeant and shorted Allergan.
Valeant has been under a considerable degree of political and legal scrutiny in the United States over hefty price increases for two heart drugs and its patient assistance program. A week ago, the company said that U.S. Attorney's offices in Massachusetts and New York had court orders for it to produce documents.
The drugmaker is one of Canada's top companies and accounts for about four per cent of the S&P/TSX composite index.
Meanwhile, U.S. law firm Robbins Geller Rudman & Dowd LLP said Friday that it filed a class-action in the United States District Court for the District of New Jersey alleging violations of federal securities laws. The complaint was filed on behalf of purchasers of Valeant stock between Feb. 23 and Oct. 20.
Two other firms — Toronto's Koskie Minsky LLP and New York investor rights specialist Rosen Law Firm — said they are each preparing potential class-action lawsuits to recover losses suffered by Valeant investors over alleged misrepresentations by the company.
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Ross Marowits, The Canadian Press