The shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) are trading higher today after announcing that it is searching for a new CEO to replace Michael Pearson and the appointment of Bill Ackman to its Board of Directors. Ackman is the CEO of Pershing Square Capital Management, which owns 9% of the company.
The stock price of the Canadian pharmaceuticals company increased more than 8% to $29.38 per share at the time of this writing around 12:36 in the afternoon in New York. The stock went up as much as $31.59 per share earlier today.
According to Valeant Pharmaceuticals, Pearson agreed to continue to serve as CEO and director until his successor is appointed.
Valeant Pharmaceuticals will thrive under new leadership
In a statement, Pearson said, “It’s been a privilege to lead Valeant for the past eight years. While I regret the controversies that have adversely impacted our business over the past several months, I know that Valeant is a strong and resilient company, and I am committed to doing everything I can to ensure a smooth transition to new leadership.”
On the other hand, Robert Ingram, Chairman of the Board of Valeant Pharmaceuticals expressed confidence that the company “will be able to rebuild its reputation and thrive under new leadership.”
The size of the company’s Board is fixed to 14. To create a vacancy and allow Ackman’s appointment, Katharine B. Stevenson voluntarily resigned as a director. The Board requested its former CFO Howard Schiller to offer his resignation as a director but hasn’t done it.
“I am looking forward to working with the board to identify new leadership for Valeant. The company’s large scale and dominant franchises in eye care, dermatology, GI, and other therapeutic areas coupled with its extraordinarily low valuation present a spectacular opportunity for a world-class health care executive,” said Ackman.
Valeant Pharmaceuticals said its preliminary findings showed that around $58 million in net revenue related to sales to Philidor in the second half of 2014 should not have been recognized upon delivery of product to Philidor. The estimate was based on the review conducted by its Ad Hoc Committee.
The Audit and Risk Management Committee of the Board determined that the company’s audited financial statements and unaudited financial statements for the quarter and year ended December 31, 2014, as well as its quarterly report ended March 31, 2015, were misstated, and investors should no longer rely on the figures.
The Committee also concluded that its Form 10-Q for the period ended June 30, 2015, and Form 10-Q for the period September 30, 2015. The figures should no longer be relied upon because the company’s results in the first quarter were included in both reports.
Valeant Pharmaceuticals is in the process of correcting the affected financial statements, which would be included in its Annual Report on Form 10K for the year ended December 31, 2015.